What a year we had for 2021 in the speed of the real estate market and appreciation of home values! Is 2022 going to be as exciting? In this blog I am going over my predictions for the housing market for the year 2022, then providing how I achieved those predictions, which include the state of the economy and the stats of the housing market.
You can also watch my predictions here
My Prediction
Here is my prediction: I expect most areas to see a slight uptick in their home values, not as much as in 2021 and there to be an increase in the volume of home sales. I expect there to be less competition per home, because of the number of homes for sale, which will spread the buyers making offers per home. It should still be a sellers market(meaning homes being sold on average of 6 months or less). Interest rates will rise throughout the year and I expect to see the biggest increase in interest rates around summer, not exceeding 4%.
Overview of how I got to that prediction
In this article, I’ll use a variety of sources, including the California Association of Realtors, The National Association of Realtors, local market data, and other trusted sources like Brian Buffini to help me find out predictions for the next 12 months. The goal of my predictions is to help you understand the overall health of the real estate market, which can help you plan out your decisions in real estate. To do so, let’s look at the current state of the economy. From the beginning of the Pandemic up to now.
The current state of the economy.
According to knoema.com, which analyses the G20 economies in the world, the US unemployment rate in 2019 was at a value of 3.7% and shot up to approximately 6.8% in 2020. In 2021, the unemployment rate dropped to 4.7% and in 2021 it is expected to be 3.8%. That is back to the pre-pandemic level. Even though we see unemployment rates dropping to times that they were previous to the pandemic, it does not tell the entire story of the labor market. When we look at how many people are currently employed in the United States, back in 2019 there were 157.54 million people employed. In 2020, that number dropped to 147.79 due to the pandemic. In 2021, we saw a slight increase to 152.72 million. Now in 2022, that number is expected to jump up to 159.82 million people. - statisa.com . What this all means is that the unemployment rate is dropping, and more people are working.
The Chair of the Federal Government, Jerome Powell, announced they will slow down their purchases of bonds in 2022. In doing so, historically, the interest rates on homes go up. - pbs.org.
The local current state of the economy
The state of the real estate market.
Here are the stats for homebuyers: 87% of buyers financed their home purchase with 13% being the typical down payment. We saw a 33% increase in refinancing activity compared to the first half of 2020. When we look at the last three years, interest rates were 3.94, 3.11, then 3.07.
34% of all buyers were first-time buyers. 27% of buyers made a compromise on the price of the home and 21% of buyers made a compromise on the condition of the home.
Stats of home sellers: The national average of equity a home seller had in their home is $85,000, with the median of homes selling at 100% of the final price. The majority of sellers are trading up, with 46% purchasing a larger home, 61% purchasing a newer home and 48% purchasing a more expensive home. The top reasons why people are selling are a desire to live closer to friends and family, their home is too small, or their current neighborhood has become less desirable.
When we look for regional trends in the west, we have the median home price increase to $450,000, with the median buyer income at $112,500 and an uptick of single-and-multi-family housing of 22.6%.
I would Love to hear your thoughts on the current state of the housing market and where it's going to go. If you would like me to go over any local housing market and breakdown piece by piece of depending on what's important to you just let me know, and I'll be happy to do that for you.
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