The housing market boomed in 2021, with competition and high home prices. This is what Ilyce Glink and Samuel J. Tamkin from The Washington Post have to say about some housing market predictions for 2022 after having conversations with real estate experts and industry observers while attending the National Association of Real Estate Editors Conference.
One: iBuyers are evolving.
iBuyers are real estate companies that offer a service of allowing customers to buy and sell property on demand. The company buys your home for a price that their algorithm puts on it, which then allows you to either make a non-contingent offer or cash-like offer at will.
Even though this strategy sounds perfect, there are still some downsides. Some businesses change their model, locking you into something you didn’t sign up for. Some businesses like Zillow have lost a lot of money from their iBuyer service, forcing them to shut down that option, according to The Washington Post.
Two: Interest rates are rising.
Mortgage rates have been known to fluctuate. The Coronavirus created very low interest rates for home buyers due to the economic situation. Mortgage interest rates are currently below 3%; however, according to expert Lawrence Yun, the chief economist of the National Association of Realtor, we can expect to see 30-year mortgage interest rates rise to 3.5% in 2022.
Three: Millennial and Gen Z home buyers may find buying is unaffordable.
If we see a huge rise in interest rates, millennials and Gen Z home buyers will not be able to catch up and afford a first time home purchase. The housing market is mostly comprised of millennial home buyers at the moment.
Home value annual rates sky-rocketed in 2021. Because the growth was in the double digits, it is unsustainable for the housing market. It will become a balancing act of either earning a higher income, interest rates staying low, or home prices will have to depreciate, in order for people to continue to be able to buy homes.