- Where are home prices headed in 2022? I will be reviewing a ton of market forecasts by many of the industries leading companies and researchers. These forecasts range anywhere from another tremendous year with massive appreciation to a slight decline in home prices. Please keep in mind that these are national price forecasts, and local markets can vary drastically. I’m Tim Hamilton with StellarQuest Real Estate. If you’re thinking about buying or selling a home please feel free to call, text, or email me anytime. I can answer your questions and help you determine the next steps to get the best possible outcome.
- We are going to start with a few of the more optimistic forecasts and then work our way down the chain. Zillow has the highest price forecast of the group. They recently predicted home prices would increase by 13.6% from October 2021 through October 2022. Personally, I am a little bit skeptical of Zillow’s accuracy after their recent failure with their Zillow Offers home purchase program. They overpaid for many of the homes they purchased and are now selling them at a loss. Goldman Sachs also released a forecast with very high expectations on October 11th. At that time, they predicted home prices would rise another 16% by the end of 2022. These forecasts are both slight slowdowns from 2021, but would still beat the historical average by about 3 times. According to Fortune, since 1980 home prices have appreciated by about 4.6% each year.
- Fannie Mae and Freddie Mac both recently released very similar forecasts. Fannie Mae is expecting an appreciation of about 7.9% for 2022, while Freddie Mac is expecting 7%. Both entities are expecting slightly higher interest rates, but buyer demand should remain strong. The chief economist at Fannie Mae stated he expects the severe shortage of housing to be the primary driver of appreciation. These forecasts suggest that price appreciation would slow substantially from Freddie Macs expected 16.9% growth in 2021, but 7% is nothing to be upset about! It is still a tremendous year for home ownership that is well above the 4.6% historical average.
- Next up we have Redfin and CoreLogic, which are forecasting very minimal appreciation next year. Redfin doesn’t have a forecast for the full year, but they do state they are expecting home appreciation to slow to 3% by the end of 2022. They are expecting homebuyers to rush into the market in the early stages of 2022 to take advantage of low interest rates before they rise too far. CoreLogic is expecting national home prices to rise by only 1.9% from September 2021 – September 2022. That would be a very minor price increase and a drastic slowdown from 2021.
- Lastly we have the Mortgage Bankers Association. They are forecasting the median priced home will decrease by 2.5% between the fourth quarter of 2021 and the fourth quarter of 2022. The primary difference in their model is the interest rate they are expecting. They believe interest rates will rise to an average of 4% at the end of 2022, which is much higher than most of the other models. Higher interest rates makes purchasing a home more expensive, and would certainly impact home affordability and home buyer’s purchasing power. A drop of 2.5% is certainly not a positive outlook, but it is very far away from an outright housing market crash.
- You can see there is a wide range of forecasts moving into next year. The good news is that most of these forecasts see price growth as opposed to a price decline. Interest rates will be one of the largest determining factors of the market and is one of the main variables affecting each of these forecasts. If the federal reserve raises rates aggressively to fight inflation, one of the lower forecasts is more likely to be correct. On the other hand, if the fed keeps rates low throughout 2022 with only minor rate hikes, we could have another incredible year for housing.
- If you’re thinking about buying or selling a home, please feel free to contact me anytime. You can find all of my information in the description below. I would also be happy to send you copies of the forecasts I referenced if you’re interested in learning more about each of their models and predictions.
StellarQuest Real Estate – Lic. # 02077900
Tim Hamilton
Broker Associate – Realtor®
Lic. #01959966
(714) 486-4086
timsellsca@gmail.com
www.StellarQuest.com