Real Estate Agency in San Diego
Article published on December 27, 2021
The housing market in 2021 was inevitably a tough ride for home shoppers alike. While increased flexibility from working from home paired with low rates allowed many first-time homebuyers a chance on the map, fierce bidding, limited inventory, and fluctuating prices only made housing more difficult than it has to be.
Despite the rough year in the market, real estate experts predict a more normalized market in the upcoming year. Competition may gradually start to wear off, and price growth may also begin to stabilize.
This article will provide a general outlook for the housing market in 2022, alongside several things homeowners and homebuyers can expect.
DEMOGRAPHICS AND MARKET DEMAND FOR REAL ESTATE
Several mortgage and real estate experts share varying opinions about the 2022 housing market predictions; however, most agree that the market will remain competitive given that a long time is generally needed to accrue inventory again. Even so, they think that prices and competition will simmer a bit compared to the previous year.
In addition, the executive vice president for RealtyTrac, Rick Sharga, also trusts that the housing market’s strong performance will carry on until the preceding year. He states that the low mortgage rates will continue to drive demand for the house market and demographics, especially since many millennials are approaching the prime age as first-time homeowners and buyers.
The pandemic also accounts for the forecasted increase in demand considering how many employees have to adjust to remote work because of health concerns, thereby encouraging city residents to look for spacious homes in places with minimal population density.
The Mortgage Bankers Association (MBA) says the same, alluding to how mortgage interest rates will be low in 2022. JLM Real Estate in San Diego will have to look out for this forecast, with the national mortgage rate possibly being 4% for 30-year rates and 2.3% for 15-year ones at the conclusion of next year.
Such a situation is clearly probable if inflation does not decline since the market may be compelled to push higher rates which can inevitably take a toll on buying power and affordability.
HOME PRICE PREDICTIONS AND SALES VOLUME
There is an expected rise in home prices because of limited supply. Despite this, the increase in prices will ease in 2022 to make room for household affordability. In addition, the average house listing price back in August was $380,000 — nearly 16% greater compared to 2020. Because of this, there is good reason to speculate that home prices may elevate by up to 5% next year.
Apart from that, the house sales volume increased by 5% compared to the 2019 sales, with 42 300 home sales during 2020. The increase becomes significantly evident with 2021, considering that there are 38% more sales than the former. Even so, sales volume is anticipated to be low in 2022, mainly because of COVID-19 and the job losses that resulted from it.
There’s also the foreclosure moratorium in California which gave sellers enough breathing room. However, the Consumer Financial Protection Bureau has restricted the ability of loan servicers’ to lead foreclosure procedures until January 1 of next year. Because of these reasons, California should expect low house sales volume for 2022.
HOUSING INVENTORY PREDICTION
As the real estate market normalizes, industry experts also believe home inventory to increase, especially since current homeowners are already seeking to move. Moreover, the supply will also be constantly supported by this increasing inventory of new homes for purchase in 2022. There might also be investors who can take advantage of the current high prices and start selling rental properties in the market.
Nonetheless, housing inventory will likely remain a problem for the preceding years due to supply continuously being disrupted by COVID. As such, the real estate market may be in a state of inventory shortage for a decade, especially with county and city governments still not allowing higher-density products that usually provide for the workforce and affordable housing.
THE 2022 RENT SITUATION
Buyers may be particularly motivated from Rental Property Acquistiions for 2022. However, even with the eviction moratoriums, the rent picture will change significantly once they cease.
The Tenant Protection Act of 2019, implemented last January 1, 2020, effectively forbids landlords from increasing the gross rental late by more than 5% points along with the percentage change in living costs — whatever if lower of either rent charged during the 12 months prior.
Consequently, such changes mean that the Tenant Protection Act will contribute to the number of prospective buyers in 2022.
To put it more simply, tenants seeking to avoid the rent increases will eagerly enter the market, thereby increasing home buyers than sellers for the following year.