Maximize returns.
Eliminate the busywork.

Accounting & Reporting
Tenant Screening
Rent Collection
Landlord Banking

All in one place.

Get Started For Free

2022 Housing Predictions from the Experts

2022 Housing Predictions from the Experts
by Brad Cartier, posted in Newsletter

We had an interesting year for real estate with lockdowns, moratoriums, forbearances, limited supply, record price increases, among other things. It certainly was an eventful year! So what’s in store for the new year? Here’s a roundup of recent predictions from various experts in the field.

Brenda Richardson of Forbes pulls from a number of real estate commentators who have something to say about 2022:

  • Danielle Hale, chief economist: “We expect a whirlwind 2022 for the housing market. Home sales are expected to increase another 6.6% and home prices to rise another 2.9% on top of 2021 highs. A gradual uptick in mortgage rates will make affordability a top consideration for home buyers, especially the 45 million Millennials aged 26 to 35 who are at prime first-time home buyer age.”
  • Bob Pinnegar, president and CEO of the National Apartment Association: “Housing affordability will remain a key issue as the nation’s rental housing market tries to stabilize from lingering pandemic and housing stock issues. Supply chain delays and continued inflation will also impact every facet of the industry, from property managers to renters to owners.”
  • Daryl Fairweather, chief economist for Redfin: “After two years of unprecedented uncertainty in the housing market, we’re expecting 2022 to be just as unpredictable. We expect 30-year-fixed mortgage rates to slowly rise from around 3% to around 3.6 by the end of the year, mostly attributed to the pandemic subsiding and inflation continuing to linger.”

Jim Dalrymple II of Inman (subscription required) discusses the future of Zillow in 2022 following some major hurdles and mishaps this year with their failed iBuying program. Believing that the real estate marketplace will pivot in 2022, Dalrymple notes: “But whatever specific path Zillow goes down, it’s significant that the story right now is the pivot. No one is expecting Zillow to simply keep “trucking along” in its current state, the way they are with a rival such as Redfin. And that means 2022 will be a year of big opportunities, as well as big expectations.”

Lance Lambert of Fortune offers a number of pontifications, including some projections that show a price deceleration that will see housing values calm down to more historical averages.

Housing price growth heading into 2022 - Fortune

Source: Fortune (Nov. 29, 2021)

In a second article on Fortune, Lambert notes that price deceleration is primarily due to a rising interest rate environment. “[A]n inflation-concerned Federal Reserve is now likely to raise rates. Indeed, foresees the current 3.1% average 30-year rate rising to 3.6% by the end of 2022. Rising rates, of course, would put downward pressure on price growth as it raises the cost to buy and locks some buyers out altogether.”

Economists at offer a number of predictions for the new year, here are some of the key points:

  • Median home sale prices will increase 2.9% in 2022.
  • Continued home sales growth of 6.6% in 2022, a 16-year high for sales nationwide.
  • Rents will outpace home price growth in 2022.
  • Inventory strains will begin to ease with more permits and construction.
  • A preference for the suburbs will remain.
  • First-time home buyers will continue to struggle amidst high prices.

Erik J. Martin of The Mortgage Reports interviewed seven real estate industry experts and, based on their predictions, opined that demand will continue to be strong in 2022 as millennials and other demographics still value homeownership. Further, home value appreciation may decelerate, but will continue to rise amidst a supply and demand imbalance. And, for interest rates:

Mortgage rate predictions for 2022 - Mortgage Reports

Source: The Mortgage Reports (Nov. 19, 2021)

Mike Simonsen of Housing Wire offers some predictions for 2022, noting that demand will remain strong amidst continued low inventory. This will keep prices elevated into 2022.

Inventory slump - HW

Source: Housing Wire (Dec. 10, 2021)

Marc Rapport of The Motley Fool offers his thoughts on what’s in store for the coming year.

  • Rising interest rates will have a cooling effect on real estate markets.
  • Homebuilding will continue its year-over-year increases, giving homebuyers much-needed supply reprieve.
  • Multifamily will stay strong throughout the year, and single-family rentals will remain a darling for investors large and small.

Zillow offers similar predictions to the above, including:

  • Larger rental units will continue to be in high demand.
  • The Sun Belt surge will continue and move into more secondary markets.
  • More people will buy a second home (part-time vacation home or an investment property) before they buy a primary residence.
  • New construction will gain, however, will be a drop in the bucket given the ongoing supply shortages.

Finally, Frank Nothaft of CoreLogic offers some thoughts about what to expect in the new year: “2022 should be a strong year for housing. Look for mortgage rates to rise but remain historically very low, home sales to grow to a 16-year high, price and rent growth to slow, refinance to shift toward cash-out, and delinquency rates to remain low albeit with an uptick in distressed sales.”

Home price growth to slow - CoreLogic

Source: CoreLogic (Dec. 2, 2021)

Interest rates

With the Omicron variant spreading fast, many have asked whether or not the Fed announcement of interest rate rises may have been premature.

According to Spencer Lee of National Mortgage News (subscription required), “The recent surge of new coronavirus cases helped lead mortgage rates to their lowest point in over a month, according to Freddie Mac.” Lee quotes Sam Khater, Freddie Mac’s chief economist, as saying: “The market volatility resulting from the COVID-19 omicron variant is causing mortgage rates to decrease.”

The predictions above that interest rates will likely rise in 2022, but remain historically seems plausible given the economic headwinds posed by COVID-19 variants.

Indeed, Flávia Furlan Nunes of Housing Wire reported last week that the average 30-year fixed-rate dropped to 3.05% from 3.12%. Again quoting Freddie Mac chief economist Sam Khatar, it was noted that “[T]he COVID-19 Omicron variant is causing market volatility. Despite the decrease in rates last week, the expectation is that rates will increase in 2022.”

30 year fixed rate - FRED

Source: Freddie Mac [MORTGAGE30US], retrieved from FRED (Dec. 28, 2021)

Peter Warden of The Mortgage Reports notes yesterday that:

“Average mortgage rates edged upward again last Thursday. And they’re now at their highest level over the last 30 days. However, there are signs this morning that markets are focusing again on the Omicron variant of COVID–19. And mortgage rates today might hold steady or inch lower.”

Find this content useful? Share it with your friends!