If you’re one of many would-be homebuyers who got shut out of the real estate market last year, you might be hoping for better luck in 2022.
The good news is that you probably won’t see the jaw-dropping jumps in home prices seen last year. But prices are still expected to go higher and mortgage rate hikes are anticipated, too. The housing market had the strongest showing in 15 years in 2021, sending home prices through the roof. Prices skyrocketed nearly 20% through the third quarter compared to a year before, according to the Federal Housing Finance Agency.
The frenzied competition and astronomical price tags gave many buyers pause. Heading into this year, just 26% of consumers thought it was a good time to buy a home, according to Fannie Mae’s Home Purchase Sentiment Index for December. That was a sharp decrease in sentiment from one year earlier, when 52% believed it was a good time to buy. One big reason prices have skyrocketed is that there are so few homes on the market. Housing inventory hit an all-time low in December. And, as long as there are way more buyers than sellers, competition will remain fierce and prices will go up.
“Even though demand remains strong, a majority of consumers clearly have reservations about purchasing a home at current prices,” said Doug Duncan, Fannie Mae senior vice president and chief economist. But that hasn’t stopped people from house hunting. Here’s what to expect if you’re one of them.
Home prices are widely expected to continue to rise this year, but not at the eye-popping pace of 2021. “That kind of price increase was a shock. ‘Unprecedented’ is not strong enough. It was nuts,” said Skylar Olsen, senior director and principal economist at Tomo Networks, a buyer-focused mortgage and home-purchasing platform. The median price of a home was $346,900 in 2021, up 16.9% from 2020, and the highest on record, according to the National Association of Realtors.