2022 National Real Estate Predictions (Our Sonoma County Results May Vary!)
2022 Real Estate Predictions: The real estate market in 2021 saw unprecedented highs here in Sonoma County. We enjoyed a golden year of home price appreciation, low interest rates and limited inventory. Creating the perfect storm for sellers to cash in on all the equity gained!
With mortgage rates expecting to increase and many federal support and relief programs set to end in the new year, we are predicting the market will look a bit different by the end of 2022.
Here’s what the future holds for real estate in 2022. According to Dr. Lawrence Yun, Chief Economist at the National Association of REALTORS® and industry leader, Brian Buffini, who’s renowned for his historically accurate market predictions. If you would like to see their video presentation from December, the link is here.
Important: These trends focus on the market at the national level and trickle down to impact us locally. For a more in-depth dive on Sonoma County’s local housing market stats. Visit our blog: Sonoma County Market Update | Q4 2021
1. Multiple Offers Still a Thing, But Not as Hectic
Looking at the real estate’s performance heading into 2022, Yun stated that the multiple-offer frenzy that took hold in the spring of 2021 had died down with homes on the market a bit longer than before—but they are still selling fast.
“People rushed to buy homes during the pandemic,” Yun said, pointing to a 7% increase in home sales from 2020 to 2021—from 5.7 million to 6 million, respectively. Yun predicted, however, that there will be a 2% reduction in sales this year as mortgage rates increase.
Buffini predicted that by the summer of 2022, there will be less over the top offers as first time homebuyers will be pushed to their max with increased mortgage rates and higher inflation.
2. More Inventory in Spring 2022
The housing shortage in conjunction with high buyer demand increased competition throughout 2020 and 2021, though new construction of single-family homes has been increasing, and it is predicted that there will be more inventory in the spring of 2022 as compared to last year.
Yun also indicated that more people are likely to list their homes now that federal support and mortgage forbearance programs are either ended or are slated to end this year.
3. Mortgage Rates Will Tick Up to Nearly 4% by the End of 2022
Mortgage rates are predicted to climb to 3.7% by the end of 2022, affecting first-time homebuyers who may have been holding on getting in on the 2020 and 2021 market as they expected for prices to fall and/or the market to crash. Increased mortgage rates can make home buying unaffordable for some. So far I am hearing that these rate increases are getting baked in for conforming loans but not yet for the bigger dollar jumbo loans which are based on different indices.
4. Heavy Competition in the Summer of 2022
With core inflation just under 5%, Buffini indicated that demand for real estate would tick up as people look to hedge against higher inflation, resulting in heavy competition in the national market through the summertime. We are already seeing this happen now in Sonoma County!
“Those first-time buyers are eventually going to reach a cap because of inflation and a slightly increased interest rate,” Buffini said, adding that agents will likely see a mid-year slowdown in entry-level and “move-up” housing market activity.
5. High-End Real Estate Will Soar in 2022
High-end real estate will be the last to change, according to Buffini, who forecasted that the luxury home market will “continue to zoom all year long.”
To listen to Buffini’s full interview on “2022 Real Estate Predictions” with Dr. Yun, head over to his podcast.