Although there is still low housing inventory and high demand, the seller’s market shouldn’t be as intense as it was at the peak of 2021. Home prices should rise at a slower pace, and buyers need to create a strategy based on what they can afford rather than fear of missing out. Sellers shouldn’t expect the same frenzied bidding wars as in 2021, and they need to be prepared for repairs and improvements to take longer because of labor and material shortages.
2022: Seller’s Market but Less Intense
So far in 2022, it looks to continue as a seller’s market, but without the intensity of 2021. This means that it should be less competitive for buyers. In 2021, the supply was out of balance with the demand in 2021, but 2022 looks more similar to traditional markets. The number of homes for sale should increase, and bidding wars should be less intense. Pricing growth should be in the single digits, which is slower than 2021.
Mortgage Interest Rates
An increase in mortgage interest rates will affect the buying power of buyers, so it is more important to understand your financing. The important thing is to remember that higher interest increases your monthly payment, and you shouldn’t go for the top end of your budget. There may still be some bidding on desirable homes, so look at houses below your budget level.
Work From Home Points to Seller Market
Although many of those who bought homes in 2020 through 2021 are not likely to purchase homes this year, the shift to long-term work from home is causing people to rethink their housing. This leads to a continued seller’s market, but not at the same frenzied pace. More affordable housing markets may see increased competition as people who work from home look to move to a more affordable location.
Shortages of Houses Drive Prices up
If there is a sharp increase, it results from demand beating out supply. When there is a housing shortage, buyers need to compete. When it balances out, the prices remain more stable.