In 2020, we saw some of the lowest mortgage interest rates in history. It prompted a surge of home buyers to bite the bullet on purchasing a home. Suddenly, market demand outpaced supply, and houses were selling in mere hours after they were listed.
The last 2 years have been a tumultuous time in the housing market. If you tried to buy a home, you probably got caught up in a contentious bidding war. Many factors played into the changing market, including:
- Low-interest rates made buying a house more affordable
- Remote work gave buyers more flexibility with location
- Shipment delays made it time-consuming to build new homes
In the year to come, how will the real estate industry fare? The demand for homes has been higher than ever, and that’s not a trend we anticipate will change soon. Here’s what we expect to see in the 2022 housing market:
Supply Chain Delays
Why are there fewer houses for sale these days? In part, that’s because it’s more time-consuming to build newer ones.
An ongoing effect of the pandemic is disrupted supply chains. Building materials (such as lumber, plumbing fixtures, and windows) are taking longer to ship. On top of that, there are labor shortages, meaning fewer workers are available to build those houses.
The owner of Leo Wilk Real Estate writes, “It’s a seller’s market in 2022. People know that buyers have limited options, and they’re pricing their listing accordingly”.
With fewer homes for sale and more potential buyers, we expect that the housing market will remain highly competitive in 2022.
Fluctuating Interest Rates
Interest rates determine your monthly mortgage payments; they’re the fee you pay for borrowing the money to buy your house. With lower interest rates, buyers pay significantly less money when taking out a mortgage for a home.
Since interest rates have dipped so low, it’s only natural that they’ll bounce back at some point. Is that going to happen in 2022? While it’s tough to say definitively, most real estate experts expect that interest rates will start to rise. Even so, rates will remain lower than they were before the pandemic.
Limited Options
You’re ready to buy your first home; you’ve saved up a hefty down payment, and you’ve given notice to your landlord. But the real challenge in 2022 is finding a home to buy. With so many people house-hunting, there aren’t a lot of options.
The owner of a property management company writes, “Many of our tenants have had a hard time finding houses this year. The market is just too hot for most of our tenants to successfully purchase a home.”
There are plenty of reasons why people might decide to buy a home in 2022. If it makes sense for you, then you can bet you’re not the only one.
Flexibility with Location
Two years later, it looks like remote work (or hybrid work) is here to stay. Countless companies are embracing the notion of the remote/hybrid workforce, where some employees come into the office regularly, some rent co-working spaces, and others work exclusively from home. What does this mean for the housing market?
Many employees prefer to work out of their home offices rather than return to the workplace. And if their current home is too small, they’ll look for a new one with a bigger home office.
Remote work affects the housing market in another way: it gives buyers more flexibility when it comes to location. Before, a worker was limited to houses in the areas nearby their workplace. Now, they can work remotely from any area of their city.
Thinking of selling your home? If so, 2022 is a great year to do it. But it’s not as great of a time to buy a house. You might deal with a limited pool of options, delays with building material shipments, and competitive bidding wars. As such, we expect that the higher demand for housing is here to stay.
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