2022 Real Estate Trends
August 8, 2022 Mark MacFarlane

2022 Real Estate Trends

Posted in Home Buying, Home Selling, Real Estate

2022 Real Estate Trends

Year of Change

In 2021, homeowners and sellers were faced with low interest rates and high demand, which resulted in higher home prices than ever before. With 2022 already underway, there are a few trends we can expect to continue and new trends for real estate investors, buyers, and sellers. If you’re hoping to purchase a house this year, you might be in luck. While homes are still expensive, there’s still plenty of inventory, and you can expect fewer instances of multiple offers to drive up the home prices. Here are the 2022 real estate trends.

cash for house symbol with stick people outside

Rising Mortgage Rates

Mortgage rates hit an all-time low in early 2021, but they’ve been on the rise ever since. Experts agree that mortgage rates will continue to rise in 2022, but those rates will still be historically low. Rising mortgage rates might sound scary for homebuyers, but it only means paying an extra few hundred dollars per month, at most. If you’re a renter, you can expect your rent to rise that much as well, so it’s a better investment to purchase a house now, while mortgage rates are still considered low.

Houses with Down Arrow showing Price decline

Declining Competition

In 2021, many homebuyers competed for just a few homes on the market, which meant buying smaller homes for more money, and moving their belongings that didn’t fit in their starter homes. Due to a lack of inventory last year, homebuyers drove up the prices of homes, which forced many people out of the market. While competition will continue to decline this year, you shouldn’t expect a buyer’s market just yet. However, more houses will be on the market, which means less competition overall.

You can expect more first-time real estate investments with less competition, allowing more people to enter the market.

Slowing Home Appreciation

As homes appreciated in 2021, experts expect appreciation to slow throughout 2022. However, don’t expect to see a drop in home prices, but home prices will not go up as much or as quickly as they have in the last two years. In addition, the housing market as a whole will start to normalize again, thanks to increasing interest rates.

Both buyers and sellers will be happier with a more stable real estate market.

In 2021, we saw supply and labor shortages which meant fewer new constructions on the market. The supply shortage will be less of an issue throughout 2022, which will increase the inventory of new construction homes. As a result, homebuilders should be able to increase the number of homes they build this year, helping them easily meet the demand for homes. With more homes on the market, you can expect price growth to level out, which can help more first-time homebuyers and buyers priced out of the market afford homes they couldn’t get in 2021.

cash for house offer approved with a thumbs up sign

Investors Won’t Stop

No matter what happens in 2022, real estate investors will not stop buying homes. While home prices and rents increased in 2021, investors continued to purchase single-family homes. As a result, this year, many investors will continue to see high returns from last year, with 2022 offering an opportunity for great returns as demand and rental prices continue to increase.

couple outside house with for sale sign

More In-Person Open Houses

Now that many people are vaccinated, you can expect a return of the in-person open house. While in 2021, many realtors were able to offer virtual tours of homes, they’re excited to get back in the swing of things and be able to showcase houses to prospective buyers in person. Even though everything has become more virtual, including the workplace, buyers still want to experience a home in real life before they make a purchase, especially when there might be multiple offers on the house.

Extensive home repairs

Continued Compromises 

Due to an increase in prices, multiple offers, and more competition, many homebuyers were forced to compromise in 2021. Homebuyers might still be priced out of the market while home prices will steady in 2022, but there will be less competition. If they’re not priced out, they’ll still have to compromise what they want in a home. First-time homebuyers, in particular, might have to buy smaller homes and contend with multiple offers on the more affordable homes.  Additionally, many home buyers are having to take renovations into their own hands in order to find their dream home.

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Fewer Sellers

As appreciation rates slow, many potential sellers might choose to wait and see where the market goes in 2022 and wait for it to level out. Even though there will still be plenty of houses on the market for buyers, including new construction that’s more affordable, many potential sellers might choose not to sell. Instead, these individuals might choose to fix up their current homes and stay in them. For example, homeowners may decide to improve their lawns, fix problems with the foundation, or purchase new appliances before selling. These potential sellers might choose to sell in the following years to wait and see where the economy goes after 2022.

Renting Becomes More Expensive

In some markets, renting might become more expensive than buying. As rent prices continue to increase with home prices, many people, particularly those in the midwest, might find that rent prices are the same as a possible mortgage. Buying a home is a better investment for individuals who can afford a down payment as appreciation increases, especially in up-and-coming areas. Before buying a home, check out rental prices in your area to determine if it will be more affordable to buy or rent. While renting seems attractive in an unsure market, buying is a better investment for first-time homebuyers that are ready to own their own homes.

Final Thoughts

Buying and selling in 2022 will depend on your local markets. In some areas, homes will not be affordable for buyers. However, in others, rent will be more expensive than a mortgage. So 2022 could be a good year for buyers and sellers, depending on their markets and what’s trending locally. Buyers should still be prepared to compromise, and many sellers can still expect multiple offers, but it won’t be as competitive as last year.

Article Written By Julia Olivas

Julia Olivas graduated from San Francisco State University with her B.A. in Communication Studies. She is a contributing writer at 365businesstips.com where she loves sharing her passion for digital marketing and content creation. Outside of writing, she loves cooking, reading, making art, and her pup Ruby.

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