- The California housing market experienced incredible price growth in 2021. Many who are considering buying or selling a home are wondering if it will continue in 2022. The California Association of Realtors recently released their forecast which has some good news for buyers and sellers. According to their forecast, the market will continue to see price appreciation, but it will be at a reduced rate compared to 2021. If you’re wondering if it is the right time for you to buy or sell a home please feel free to call or email me anytime. We can discuss your plans and I can help you determine if it’s the right time for you to make a move based on your situation.
- The total number of home sales are expected to decrease slightly due to supply constraints and higher home prices. Despite the slight slowdown it is still expected to be the second highest number of homes sold in the last 5 years. They are expecting home sales to drop by 5.2% from 2021, which would still be 6.8% higher than 2020. This means buyer demand will likely remain strong in 2022.
- They are also expecting the median home price to rise by 5.2%. This is considerably slower than the projected 20.3% we had this year, but it is still a strong housing market with good appreciation. They believe higher home prices will be driven by a continued imbalance between supply and demand, as there simply aren’t enough homes for sale. However, demand is likely to shift to more affordable areas along with higher interest rates will keep rising home prices in check. Dave Walsh, CAR’s President stated homeownership aspirations still remain strong and buyers will have more inventory to choose from. Jordan Levine, Vice President and Chief Economist at CAR added that demand will continue to outstrip available supply as the economy improves.
- As prices and interest rates both rise, homes will become more expensive to purchase. Housing affordability is forecasted to drop by 23% in 2022, after a projected drop of 26% in 2021. This is a great example of the power of interest rates and their impact on housing. In a year where home prices went up by 20.3%, we saw affordability drop by 26%, and in a year with projected appreciation of 5.2%, affordability is expected to drop by 23%. A 15.1% different in appreciation with only a 3% difference in affordability. The difference is interest rates. 2021 had the lowest interest rates on record, while rates are expected to rise in 2022. They will still be historically low interest rates, but they will have a big impact on affordability.
- The good news for home owners and potential sellers is that prices are forecasted to increase next year at a very solid rate. Buyer demand will likely remain strong and the number of homes for sale will remain low. These are the conditions that have lead to a strong housing market in years past. The good news for buyers is that competition is likely going to slow next year. This will make it slightly easier for buyers to secure a home compared to this year, which was very tough. If you’re thinking about buying or selling a home please feel free to contact me anytime. You can find all of my contact information in the description below.
StellarQuest Real Estate – Lic. # 02077900
Tim Hamilton
Broker Associate – Realtor®
Lic. #01959966
(714) 486-4086
timsellsca@gmail.com
www.StellarQuest.com