Real Estate Trends for 2022 Investors, Buyers and Sellers Need to Watch

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If you’re thinking of buying or selling a home, investing in real estate, or are a realtor or lender – the coming trends will affect your finances. Here are some important trends the experts say you need to watch for in 2022.

Here are the most important real estate trends happening in 2022

The most important factors that will affect the real estate market in 2022 are high demand, rising prices, rising mortgage rates, and a drastic drop in origination volume.

  1. High demand for homes, low supply

The supply chain and shortages in the U.S. affect every American life sector, and the real estate market is no exception.

The supply of U.S. houses has been at its lowest level since the 1970s.

In 2021, the demand for homes was high and that trend will continue well into if not throughout 2022, according to the experts.

This is good news for sellers, but not so much for buyers.

Researchers from Goldman Sachs said: “Of all the shortages afflicting the U.S. economy, the housing shortage might last the longest.”

Good news for homebuilders, construction stocks

If there is any silver lining here, Goldman expects that the supply shortage will lead to a multiyear boom for the homebuilding industry. This will be facilitated by expectations that states will deregulate land usage, accelerating and increasing construction.

The value of construction stocks is expected to increase, especially for builders such as D.R. Horton (NYSE: DHI) and PulteGroup (NYSE: PHM).

  1. Rising home prices to continue, but at a lower degree

From August 2022 to August 2021, the year-over-year prices of homes climbed by nearly 20 percent. Experts expect high demand to continue to drive prices higher, but not quite at the same pace.

· Zillow predicts home prices will climb by 13.6% from October 2021 through October 2022.

· Goldman Sachs predicts an increase of 16% from October 2021 through October 2022.

· These numbers are still significant. However, others see a much lower pricing increase.

· Fannie Mae predicts home prices will only increase to 8%.

· Freddie Mac predicts home prices will increase to only 7%.

· The Mortgage Bankers Association (MBA) sees things moving in the opposite direction, with prices falling 2.5% by the end of 2022.

  1. Mortgage rates to rise

With inflation hitting 6.8% in November, the highest since 1982, many economists expect the Federal Reserve to respond to rising inflation by notching up interest rates, sending mortgage rates higher, the Motley Fool reports.

According to Google, on December 19, 2021, today’s average mortgage rates were 3.541% for a 30-year fixed loan.

Bank of America is forecasting two rate hikes in 2022 and another three in 2023 and 2024.

Fannie Mae’s Economic and Strategic Research Group foresees mortgage rates averaging 3.3% in 2022.

The Mortgage Bankers Association (MBA) expects to see a rate of 4% on 30-year fixed loans in 2022.