2022 will be a slightly better year for buyers, but they will still face a seller’s market as demand is still far outweighing supply. Interest rates and home prices are expected to continue to rise as inflation pushes day-to-day costs and potentially people’s incomes.

High Home Sales Growth

Home sales are at a record high and are expected to grow by another 6.6% in 2022. Over 45 million millennials are reaching the typical homebuying age of 26-35 this year, making demand even higher for available houses. As the economy resettles from the pandemic and employment increases, we expect to see an income growth of 3.3% in 2022, which will keep prices high. The interest rates are projected to rise in 2022, yet still historically low.

Home Prices Forecast To Appreciate

Simply put, we can’t have the price increases we saw in 2020 and 2021, or homes would become unaffordable to most homebuyers. But while we won’t be seeing the double-digit increases we saw last year, prices are still expected to rise by another 3%. We haven’t caught up quite yet will creating enough supply for the massive demand we see for homes. Because of this, prices will continue to be high moving forward.

More Houses for Sale

While 2022 will still face problems relating to the supply of homes for sale, we will see a slight increase in the number of homes on the market. With new construction on the rise and many sellers indicating an interest in moving, inventory is expected to grow by 0.3% in 2022. It’s not much, but it will help bring costs down slightly due to less competition. Unfortunately, many homeowners are holding off on selling their homes because they can’t find a new one to buy.

Great Time to Buy in Cities

Just as we saw at the beginning of the pandemic, homebuyers are still mainly looking for houses located in the suburbs. Why is this important for you? Homes in the suburbs are beginning to outprice houses and apartments in the city. Housing market forecasts estimate that even more people will flock to the suburbs in 2022. This could be big for anyone looking to buy a home in the city, as pricing will be more stable than in the suburbs, and they could face slightly less competition than in previous years. With rent prices projected to grow by 7.1% in 2022, buying a home in the city versus renting could also be a financially wise decision.

A Rise in Single-Family Homes

Despite a rise in the desire for homes with more space, we may see buyers purchasing smaller homes. This isn’t due to them necessarily wanting a smaller space, but rather issues related to affordability. Many buyers are expected to sacrifice space in 2022 and opt for single-family homes over larger, more expensive options.

First-Time Millennial Homebuyers

2022 will see many millennials become first-time homeowners. Almost 45 million millennials are in the sweet spot of being ready to buy a home based on where they are both financially and in their lives. Despite a very competitive market and rising mortgage rates, millennials are still expected to move into homeownership in 2022. The competitive labor market puts many of them in a good position financially to buy a home.

With demand still outweighing supply in 2022, we’ll be seeing another seller’s market for the third year in a row. Experts are projecting buyer demand will remain strong as people try to capitalize on rates and prices before they climb, creating another strong year for home sales.

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