6 Real Estate Market Predictions for 2022

Real estate market trends concept; Miniature wooden houses and red arrow up.

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Over the last two years, the real estate market has seen several major fluctuations. The market nearly stood still during pandemic lockdowns followed by an explosion of overwhelming home buyer demand in 2021. Can the momentum and pressure continue in the face of the housing shortage? What solutions and developments does 2022 have in store for the real estate market?

We’re diving into the essentials of the upcoming housing market trends.

1. Mortgage Rates and Home Prices Are Going Up 

Mortgage rates are currently on the rise from their historic low in the 3% range. We expect to see them remain low but approach 4% in the next year of financial and market recovery. However, this is slightly discouraging for homebuyers looking to get a good price with low interest on a new purchase, as increased interest rates mean increased costs across the board. As mortgages become more expensive, home values continue to shoot upward in response to high demand and short supply.

2. Pricing Challenges for First-Time Buyers

The rising home prices and mortgage rates are creating a uniquely problematic challenge for first-time homebuyers who might have limited capital and big dreams. Right now, it’s fewer houses for more across the board as young families are struggling to find large houses in an affordable starter-home price range. 

Right now, competition and inventory are settling into a new normal. Bidding wars have become common and even buyers with capital to invest are finding it hard to close on an offer with so many other buyers on the market.

3. Pandemic Home Buying Trends

As a result of quarantines and the remote work movement, many people are looking for homes with an extra bedroom for a work-from-home space, or more open-plan living space, as opposed to smaller, cramped apartments. The remote work trend is not expected to disappear anytime soon, if ever. Because of this, large amounts of people are no longer tied to the big city centers and business hubs. Their freedom to move away from city life will continue to play a key role in the high-competition housing market, continually shaping current and post-pandemic home buying.

Larger Homes in Demand, Smaller Homes Gaining Popularity

2022 is looking like a great year for tiny home sales, as miniature cottages become more appealing to those looking to stake their housing claim. Tiny homes and modular homes are both becoming more appealing options to sidestep the slowdowns of a cramped market and stick-built construction delays. These homes especially appeal to those who may be looking to downsize and simplify their lifestyle. These homes are also simpler to build at a far lower price point, are a quick and viable option for those who have a plot of land they would like to utilize, and as an added bonus have a more overall sustainable impact on the environment. As the market moves into 2022, the momentum tiny homes and cottages built up in 2021 can be expected to continue. 

Remote Work Pushes Buyers Away from Centers of Employment

One of the unique side-effects of the pandemic is the remote and hybrid work movement. Professionals who no longer have to return to the office (or very rarely) are choosing homes further from employers and city centers. Suburban and even rural homes are more desirable as the commute becomes less of a consideration. Many people are now comfortable with a 2+ hour drive to work, especially if they only come in once or twice a month.

4. Sellers are Returning to the Market with Greater Strength

A great relief to the 2022 real estate market, however, is the return of sellers. During this current housing shortage, there has been a reduced percentage of sellers on the market, most citing that they couldn’t find a home to buy so were not comfortable selling. As the market settles down from the 2021 frenzy, cautious sellers are joining the market, increasing the available inventory, and effectively making room for more sellers. This trend will help lighten pressure in the near future as sellers self-perpetuate a market increase.

5. Supply Chain Delays on Constructing New Homes

Unfortunately, we’re seeing no near end to the supply chain delays interrupting our progress in building new homes to alleviate the housing crisis. Contractors across the nation are facing construction delays for apartments, condos, and single-family neighborhood developments. This is one of the reasons that interesting alternatives like pre-constructed tiny and modular homes are rising in popularity.

We will see the supply chain transform in 2022, as locals look inward for sources and solutions when international shipping falls through.

6. Virtual Selling/Buying Stays the New Thing

Lastly, you can expect video tours to stay at the top of the charts. With COVID and travel restrictions continuing to be an issue, socially distanced house-hunting is here to stay. Fortunately, we have some great technology to make it work. In addition to top-notch photography, 360 cameras can provide immersive home tours that give potential buyers a feel for the space and floorplan.

Buyers love virtual tours, and sellers can minimize their exposure to curious strangers in their homes, making it a safe process for all involved!

2022 is looking to be one hot year for real estate. With prices going up and the market just now starting to innovate for current challenges, we’re looking toward a technology-driven, high-pressure new real estate year.

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