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2022 real estate and value concept

What Can We Expect from Real Estate in 2022?

As 2021 comes to an end, it’s time to reflect on everything that has happened in this crazy year. It’s also time to start looking ahead to 2022 and what we might expect from the real estate market. 

Recovering from the Market Pause

We saw a significant market “pause” in 2020 due to the uncertainty of the pandemic and the election. A lot of people stayed put and wanted to wait and see what would happen. In 2021, we saw things returning—at least somewhat—back to normal as the vaccines were implemented. Events, activities and travel started happening. Plans that were previously put on hold now started to be looked at again (with some changes based on the “new normal”).

No More Waiting Around

What we have gleaned from conversations with clients and friends is that the current attitude is we need to live our lives. We can’t sit around and wait for Covid to completely disappear. Things may be different and we have to take more precautions, but we have to learn to live with the ups and downs of the virus-affected world. People are going to find ways to travel and experience the things they love.

The 2021 real estate market has been very active and competitive with high buyer demand and historically low mortgage rates. People are eager to make moves. Sellers have remained cautious, content to hold on as home prices keep rising. The low housing inventory only makes the buyer competition tougher and helps keep pushing values upward.

Inflation & Mortgage Rates

Inflation is also having an effect on real estate, both good and bad. Inflation will likely lead to increasing mortgage interest rates. This weakens buying power. However, mortgage rates will likely remain at historic lows for some time as they slowly creep higher. In addition, inflating home prices will only make real estate more attractive as a hedge investment. The Federal Housing Finance Agency (FHFA) also just announced base conforming mortgage loan limits will be increased by over $98,000 next year, making home loans available to more borrowers. With all of these factors, we don’t expect demand to dwindle at all in 2022.

Rethinking Hasty Moves

We’re also seeing some people trying to undo decisions that were made in haste during the height of the pandemic. Some thought work-from-home opportunities would be permanent, but then have had to go back to their offices. It’s true that remote working and schooling will continue to grow because of this pandemic and the advancing technology. However, location will still matter for certain jobs and determine where many need to live. Urban areas saw a “mass exodus” in 2020, only to see home buyers returning in droves in 2021 as cities reopened.

Rising Home Prices

Home prices will likely continue to rise in 2021 as buyer demand remains strong and mortgage conditions are favorable. There just may not be quite the level of appreciation we’ve had in the past couple years. Things may start to level out. If and when home prices start to plateau, that’s when you’ll see more sellers on the market and a restoration of real estate balance. This isn’t happening any time soon based on what we are seeing, but we’ll have to see how 2022 progresses. There is still so much uncertainty with the virus and its new variants, the volatile political landscape and the economy.

Planning Your Move in 2022

If you are planning to buy or sell a home in 2022, you should start preparing as soon as possible. There are steps home sellers need to take to get your home ready for the market, as well as yourself. For buyers, the planning should center around figuring out where you want to live, prioritizing your housing needs and getting your finances in order before applying for a mortgage loan.

Barring any major disruption, we believe it will be a very strong year for real estate in 2022. If you have questions about buying or selling a home in Southeastern Pennsylvania or Northern Delaware, contact The Cyr Team today.

We would also like to take this opportunity to wish you a very Happy Holiday Season and Happy New Year!

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