Homebuyers had a bit of a rough year in 2021. Buyers were battling in bidding wars while home prices were rising across the U.S.
Experts are projecting a bit of a cool down in 2022, but the American Dream will still require a game plan and endurance. Here are some changes for homebuyers to be aware of in 2022.
1. The Market Will Remain Hot
With more people working from home, potential buyers are considering relocating to smaller towns and suburbs. Since the market is still projected to be competitive, this option is appealing to those who have the flexibility to do so. The hottest market of homes that typically have the toughest competition is the entry-level homes. First-time homebuyers are at a disadvantage when trying to land a home in this sizzling market, especially with the influx of cash offers. Along with that, it’s not just the first-timers that should expect a tough time. This year is on track to be the first time ever that total residential housing transactions exceed $2 Trillion.
2. Interest Rates Will Continue To Rise
To ease inflation, the Federal Reserve will most likely increase interest rates to make borrowing more expensive. This will also slow down price increases for homes. If price increases aren’t managed, there will be a negative impact on affordability. In turn, buyers will begin to pull back and sellers will need to rethink their price expectations.
3. Housing Supply Shortage Won’t Disappear
The government’s response to the pandemic altered the real estate
environment but hasn’t improved the preexisting market fundamentals. Overall, the past two years didn’t offer sustainable solutions to real estate supply and demand. With that said, real estate markets should see increased supply in 2022. Unfortunately for potential buyers, with the shortage of new construction, the market will remain competitive.
Hang in there. These changes for homebuyers in 2022 might seem a bit daunting, but working with a good local real estate agent will get you what you’re looking for.