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Spring 2022 Homebuying Season Preview

Main Takeaways for Buyers

Low housing inventory and high demand will create a strong seller’s market, but not as intense as the peak of 2021. 

Home prices are expected to continue rising, but at a slower pace than last year.

To avoid house buying FOMO (fear of missing out) and panic buying, know what you can afford and stick to a realistic budget. 

Main Takeaways for Sellers

It will still be a strong seller’s market, but compared to 2021, there will be a smaller likelihood of a bidding war driving up your sale price.

Get ahead of preparing to sell your home. Repairs and upgrades are taking longer to schedule and complete due to shortages of supplies and labor.

All real estate is local. Some markets, or sub-markets, may be stronger or weaker than others.

Work with a local real estate professional that knows your targeting market.

 

The 2022 real estate market is shaping up to be something closer to normal. 

As we approach the busy spring homebuying season, homebuyers are still likely to face an uphill battle, but it shouldn’t feel anything like 2021.

Home values skyrocketed by nearly 20% in 2021, according to the most recent data by the S&P Case-Shiller national index of home prices. While housing prices aren’t expected to drop this year, the increasing rate of prices should slow down. Many experts believe home values will increase at roughly half the rate (single-digit increases) we saw during the peak of 2021. 

Buyers may still face bidding wars, but they aren’t likely to be as intense or as frequent. That means sellers may not be as selective when choosing between offers. In 2021, all-cash offers and conventional loan offers with appraisal contingencies waived were often needed to win the bid. This year as a buyer, you may be able to be more flexible with the terms of your purchase contract, even if you aren’t necessarily getting a deal on the price.

What to Do About Rising Mortgage Rates

Today’s mortgage rates are about 1.5% higher than they were this time one year ago. Experts say several economic factors are pushing interest rates up this year: The Bureau of Labor Statistics (BLS) reported recently that inflation climbed again in February and is the highest in four decades at 8.5% year-over-year.  Expectations are that the Federal Reserve will start raising its benchmark short-term interest rate in March to address the high inflation.

What this means for spring 2022 homebuyers is that higher rates can eat into your buying power compared to last year. Yet experts tend to agree not to time the rate market and buy when the time is right for you. Experts also point out that these 4%+ rates we are seeing right now are still considered favorable from a historical perspective. It was only a few short years ago when a “good rate” was around 5%.