The housing market saw quite the boom in 2021 with prices for single-family homes jumping up nearly 20% year-over-year. Predictions for 2022 were split on whether or not more increase was coming, but now the data shows that appreciation is still happening albeit at a slower rate.
Professionals Are Now Split on Growth
At the beginning of the year, Zillow posted a report predicting that prices would be rising another 16.4% from December of 2021 to December of 2022. While groups such as Goldman Sachs have shown similar reports, housing specialist Fannie Mae is only anticipating an 11% hike in price by the end of 2022.
On the single-digit side of predictions we have The National Association of Realtors and the listing company Redfin with a 5.7% and 7% prediction respectively. The reason these estimates are so much lower compared to Zillow’s is that many experts anticipate housing growth to fall in line with inflation as it previously was.
What’s Driving Prices?
At least for the spring shopping season, the housing market is going to be struggling with the same low inventory problems it’s had since the pandemic started. The supply will be slow to catch up as delays in material acquisition on top of higher pricing for construction-ready materials have set building companies behind several months.
Interest rates are also still extremely low to help make up for the increase in price on the home itself. After news that the Federal Reserve would be moving to increase mortgage interest rates broke, many sellers who were waiting in the wings decided to step out into the spotlight and place their bids sooner than later.
The rush to purchase homes has been so hot that prices began to increase in December of 2021 when this increase tends to wait until March or April when the buying season is in full swing. Even with a short-term price hike due to increased demand, there’s light at the end of the tunnel as the number of buyers starts to wane and supply begins to fully catch up. Prices will begin to rise and fall with the rest of the economy rather than being on a separate path of price influxes.
Get Ahead of the Pack
Rising prices will start to outpace the desire for property from buyers, finding a happy balance for both buyers and sellers to operate within the market. It’s important to make sure that you’re prepared to make an offer when the price is right and you’re ready to lock in a historically-low interest rate.
Whether you’re looking to snag a home in order to cash in on appreciation down the road or simply need help navigating the current housing market, the Potempa Team is here to help you beat out the competition and get a strong bid placed on your dream home. Get started by reaching out today!