2022 Real Estate Forecast

Saying that 2020 and 2021 were crazy might be the understatement of the century. Not only did we endure countless world-changing events, but it was also a wild ride for the real estate market. We saw record low inventories and mortgage rates with incredibly high prices and value appreciation. It was one of those things you just have to put your hands in the air and ride it out like a roller coaster!

Now, as we head into 2022, people are wondering what could possibly be in store for the world of real estate. Is it time to finally put your house on the market and buy your dream home, or should you hold out for another year? Here’s what the experts predict for the 2022 real estate forecast.

Where are home prices headed?

The last time home prices were this far up in the clouds, a record-breaking crash was right on its heels. That’s what made many potential homebuyers and sellers nervous about putting their houses on the market or making a big purchase.

However, unlike back in 2008, home prices are appreciated now due to low inventory, not because of an interest-fueled bubble. Over 100 industry experts, including big-time players like Fannie Mae and Freddie Mac, say home prices are going to continue rising over the next year. While it might not be the historic 20% increases that we saw in 2020, there aren’t many signs of depreciation on the horizon.

Experts predict that home prices will continue to rise by an average of 5.1% in 2022:

• Fannie Mae: 7.4% appreciation
• Freddie Mac: 7.0% appreciation
• MBA: 5.1% appreciation
• HPES: 5.1% appreciation
• Zelman: 3.0% appreciation
• NAR: 2.8% appreciation

So, do you have to worry about a real estate crash in 2022? A grand majority of experts say no! Real estate is still a good investment with home prices steadily on the rise.

What about mortgage rates?

Mortgage rates have been a huge talking point over the past two years. By December of 2020, mortgage rates hit a historic low at an incredible 2.68%. Over 2021, rates rose ever so slightly, but they’re still incredibly low, allowing buyers to get more bang for their buck and afford more expensive houses.

Since rates have been so low, many buyers are getting nervous that a rate hike is on the way. According to experts, rates will rise in 2022 (it’s all but certain), but perhaps not as much as you may think.

While rates might not rise to ridiculous levels, keep in mind that even an increase of a decimal point is enough to boost your monthly mortgage payment by $200 or more.

Will housing inventory come back?

Inventory has been the primary driving force of all the insanity that’s happened in the real estate industry over the past two years. With COVID wreaking havoc all over the country, people just don’t want to list their homes. There’s already enough uncertainty!

Without any houses on the market, buyers are scarfing up anything they can find, which leads to increased prices and low interest rates. Luckily, experts believe that the inventory shortage might be coming to an end in 2022.

The main reason people will want to sell in 2022 is all the equity they’ve accumulated over the past two years. In the last year alone, the average homeowner gained $56,700 in equity! With such a ridiculous increase in property value, sellers are ready to cash out and move to their dream house. Look for more and more properties to become available as we head into 2022.

Bottom line

From a buyer’s perspective, get ready for more properties to become available as inventory increases. However, waiting around for another crash could cost you. With home prices steadily on the rise by about 5% and interest rates predicted to increase, the longer you wait, the more it’ll cost you. Most experts say a crash isn’t on the horizon.

For sellers, the market is still in your favor. If you bought in 2020 or earlier, your home is likely worth a lot more now than when you bought it. With interest rates still nice and low, now is the perfect time to cash out all that equity and purchase the house of your dreams with a lower mortgage rate than you might be able to find by the end of the year.

At the end of the day, the housing market isn’t expected to be as crazy as it was in 2020 or 2021, but it’s still looking like a strong year. No matter if you’re looking to buy or sell, now is the time to do it!

If you want to talk about your options, it’s always a good idea to work with a professional. Contact me if you’re ready to capitalize on this incredible real estate market and finally make your move to Hawaii. There are still plenty of properties available on the Big Island, and I’d love to help you find the perfect one to suit your needs. You can also sign up for my newsletter below to stay up to date on all the Hawaii real estate market trends.

Aloha, and welcome to Hawaii.