Will 2022 Be a More Competitive Year in the Housing Market? Many forecasts for this year predicted that mortgage rates will go up and, with that, there have been a lot of questions: does that mean I should wait to buy? Will prices go up faster than in 2021?
The truth is that until a few weeks ago we were all getting ready for a year of slower growth, as many forecasts agreed that prices in 2022 would grow by 11%. However, Zillow recently stated that this forecast was too conservative and now finds that home prices will increase by 16.4%. In short, we better buckle up for another year of brutal bidding wars for home shoppers.
Why is this happening? The housing shortage is what continues to drive up demand. The number of homes for sale last spring hit the lowest level in more than 40 years as more buyers rushed into the market. This will likely continue this year, considering that many potential buyers are now aging into their first home buying years while the supply levels are still not looking good. Inventory in December 2021 had actually decreased 17.8% from the previous year.
Higher Rates The average 30-year mortgage rate was already up to 3.45% in January (compared with 2.65% in January 2021) this is a big jump, but, in the short term, buyers will still likely rush to the market before rates continue to increase. You can still buy a new home before 2023 with a loan with a rate under 4%. In the long term, however, the higher rates will lock some buyers out of the market.
What should you consider as we near the months of the spring market? With mortgage rates up and inventory down by 43% from pre-pandemic levels, this is setting up to be another super competitive year. It is still a seller’s market and if you’re planning to sell this year, you can still get a great value for your home. However, buyers should not be discouraged. This all means that you should be prepared, not that it will be impossible.
With the right guidance, you can still present the winning offer and get your dream house this year.
Do you have any other questions or doubts about the market? We can help! Sign up for our monthly free webinar here and we'll answer any question you may have about the Portland real estate market.