Two years ago, the real estate market was sweet and hugely profitable for sellers.
Record-low interest rates made buying homes attractive, but there weren’t a lot of homes on the market, so buyers were paying more and sellers were getting great prices.
In 2022, the market is still great for sellers but the picture is beginning to change, market watchers say. The market is said to be ‘normalizing.’
Realtor.com predicts that 2022 real estate prices will continue to rise, but not as quickly as the last two years. Economists predict a slower rise of just 2.9 percent, compared to 12 percent in 2021. Meanwhile, they think mortgage rates will rise, and though there will be plenty of buyers, there still won’t be very many houses on the market. Homes for sales will still be at record lows, with a barely perceptible rise of .3 percent. Again in 2022, this is good news for sellers.
Suburban home demand will continue as buyers leave cities and look for bigger spaces as they spend more time at home.
Mortgage rates may rise from an average of 3.3 percent to 3.6 percent by the end of 2022, according to Freddie Mac data.
Meanwhile, Zillow expects home values to rise by 13.6 percent, ending in October 2022.
The end of 2021 showed higher than expected sales of existing homes. Zillow predicts those sales to continue to rise.
Zillow analysts also expect mortgage rates to rise, driven by inflation. Slightly fewer people are refinancing, but home-buying remains strong, along with retail sales, even in the presence of price increases.