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Though home prices are decelerating just a week away from the new year, more increases are expected in 2022 in another seller’s market not only sustained by low inventory, but now further perpetuated by inflation and rising interest rates as well. Higher home values boosted equity for homeowners during the pandemic, making the market much more competitive and less affordable for first-time buyers into the start of 2022, according to CNET.
Supply-chain disruptions also halted new construction throughout 2021, and with more building obstacles on the horizon, rising demand will continue to outweigh supply for months to come.
Prospective homebuyers will want to keep their eyes on some wonky stuff in 2022. The Federal Reserve announced that it will wind down bond purchasing and look to raise interest rates next year. And higher interest rates will only make things more difficult for those looking to buy, as they raise both the average monthly payment and the total lifetime cost of a mortgage.
And don't forget about inflation! That will almost certainly increase both the cost of home building materials and skilled labor. In fact, the National Association of Realtors' anticipates that annual median home prices will increase by 5.7% in 2022.
And yet it's not all doom and gloom. Mortgage interest remains are still quite low. And there are pockets of affordability in many regions of the US, creating a key opportunity for those fortunate enough to be able to work remotely.
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