2022 HOUSING MARKET PREDICTIONS

 

2022 HOUSING MARKET PREDICTIONS

As 2021 draws to a close, you’re probably already getting questions from clients about what experts are projecting for the 2022 market.

The past two years have been full of exciting and record-breaking moments. It’s also seen its fair share of buyer fatigue, hesitancy and confusion.

Here’s what industry experts are saying about what they anticipate for the 2022 housing market.

Home Prices

In the past 12 months, home price appreciation has been the topic of many headlines, and not in a good way. Speculation that we’re in another housing bubble has kept many buyers and sellers hesitant that we’re headed for another crash.

So, what does the future hold for home prices?

It’s important to remember that the 2021 market was anything but normal, and that escalating home values were a direct result of record-low inventory.

However, experts project that the inventory situation should improve in the coming year, stabilizing price appreciation across the nation.

But will home prices depreciate in 2022? Over 100 industry experts don’t think so. Instead, they are projecting a more modest appreciation of 5.82% in the next 12 months compared to the 11.74% rise seen on average in 2021.

Mortgage Rates

In case you didn’t know, the past year saw the lowest mortgage rates in the history of real estate.

So, if you have clients who are waiting for those rates to come back down or go down more, they may be waiting a very long time.

What’s important to remind your clients is that while homes right now may be less affordable than they were a year ago, they’re still extremely affordable.

If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:

• 1970s: 8.86%
• 1980s: 12.7%
• 1990s: 8.12%
• 2000s: 6.29%
• 2010s: 4.09%

While experts don’t project that mortgage rates will rise a huge amount, any increase would mean an increase in monthly mortgage payments.

A couple decimal points may not seem like a lot to most people, but it could make or break someone’s budget.

If you have buyers that are playing the waiting game, the best advice you can give to them is that a rise in mortgage rates coupled with continued home price appreciation only means one thing: paying more for the same house they’d buy now.

Housing Inventory

Inventory has been, without a doubt, the biggest player in the anything but ordinary real estate market we’ve experienced in the last two years.

With buyer fatigue running high, you’re probably getting asked, “Will housing inventory increase in 2022?”

The good news is, there are many factors that lead industry experts to anticipate a rise in homes for sale.

Here’s why:

• Homeowners may be more confident putting their homes on the market as COVID numbers continue to drop and more people become vaccinated.
• Many of the obstacles halting or slowing new construction start to fade and those homes come on the market, adding new inventory and meeting the needs of population growth.
• As forbearance comes to a close, experts predict a wave of new homes coming to the market. However, they don’t anticipate the majority of these to be foreclosures. Instead, because of built-up equity, homeowners in this position will have the opportunity to sell instead.

While more inventory may take a bit of the edge off of today’s competitive market, it’s important to remind your clients that it doesn’t mean prices will fall or homes will become more affordable. There will just be more available to choose from.

Bottom Line

If we’ve learned anything in the past couple of years, it’s that while we can project the future, we can’t predict it.

While industry experts don’t expect the 2022 housing market to be as crazy as 2020 or 2021, it’s important to stay on top of the latest insights to make sure you’re always giving your clients the most up-to-date information.

And if you want an easy way to do it, try signing up for the daily blog by KCM so you get the top real estate news and data delivered to your inbox every weekday.

There’s never been an easier way to keep you and your clients informed on what’s happening in the housing market. Sign up today.

Department of Justice to combat Mortgage Lending Discriminations

 The Department of Justice (DOJ) announced on Oct. 22 a new initiative to combat what United States Attorney General Merrick Garland is calling “modern day redlining,” investigating discriminatory practices by mortgage lenders across the country that exclude people of color in violation of federal law.

The new program—Combatting Redlining Initiative—will run through the DOJ’s Civil Rights Division’s Housing and Civil Enforcement Section. It was announced alongside a settlement with Trustmark National Bank, which agreed to pay a $5 million fine and invest another $4.5 million in Black and Hispanic neighborhoods in Memphis, Tennessee, after being accused of systematic avoidance of those communities in its lending practices.

“Enforcement of our fair lending laws is critical to ensure that banks and lenders are providing communities of color equal access to lending opportunities,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “Equal and fair access to mortgage lending opportunities is the cornerstone on which families and communities can build wealth in our country. We know well that redlining is not a problem from a bygone era but a practice that remains pervasive in the lending industry today.”

Lawsuits and investigations from Connecticut to Indiana to California have accused lenders of perpetuating the practice of redlining, which started in the 1930s with the federal government refusing to insure mortgages in Black neighborhoods and was picked up by private lenders and other policymakers. These banks have often declined to admit wrongdoing but also agreed to change their lending practices and pay hefty fines.

The new DOJ initiative will aim to further scrutinize these institutions and sniff out potential violations of the law, working with states and financial regulatory agencies, according to the release. It will also place a new emphasis on investigating so-called non-depository lenders—financial institutions that do not qualify as traditional banks which now handle a majority of mortgages, the DOJ said.

Other DOJ resources will also be leveraged as “force multipliers to ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color,” the release stated.

“We will spare no resource to ensure that federal fair lending laws are vigorously enforced and that financial institutions provide equal opportunity for every American to obtain credit,” Garland said in a statement.

Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.

As Home Equity Rises, So Does Your Wealth

 

Homeownership is still a crucial part of the American dream. For those people who own a home (and those looking to buy one), it’s clear that being a homeowner has considerable benefits both emotionally and financially. In addition to long-term stability, buying a home is one of the best ways to increase your net worth. This boost to your wealth comes in the form of equity. Equity is the difference between what you owe on the home and its market value based on factors like price appreciation. The best thing about equity is that it often grows without you even realizing it, especially in a sellers’ market like we’re in now. In today’s real estate market, the combination of low housing supply and high buyer demand is driving home values up. This is giving homeowners a significant equity boost. Click here to continue reading the full blog and share it with your sphere.