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What’s in Store for the Housing Market in 2022?

By Lucas Smith | September 17, 2021

Over the last year, one story that has dominated headlines is how well the residential real estate market performed. This presents an opportunity for homebuyers and investors alike who are looking to take advantage of this rapidly appreciating asset class with potentially huge returns on investment!

A key metric in allaying fears about skyrocketing prices was just released data from IPTS which measures price changes at over 14 million homes throughout America – it showed more than doubling between April 2018-March 2019 when compared against 3 years ago (April 2014).

Here are the latest percentages showing the year-over-year increase in home price appreciation:

The latest Home Price Index from CoreLogic, which measures home prices in every state and over 1 million houses nationwide to track their changes year-over-year shows that even those homes on the lower end of this spectrum are seeing a 19% increase.

A few price points away at $200K+, however – where demand has been most stringent due largely to stagnant GDP Growth Rates resulting poor sales activity throughout all market segments across America’s Big Four Cities (New York City, Los Angeles) as well tends marketshare losses by competitors like Miami Beach who have increasingly stepped up there game with more ambitious development plans set forth–we see an average rise closer towards 21%.

Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

The housing market has been booming over the last 18 months. The supply of available homes for sale was near historic lows, and there are plenty people who want to buy one!
Is this a sign that prices will continue appreciating in 2022? Let’s take another look at those numbers: on average it takes 5-6 months just to get an offer accepted by sellers; however during December 2017 – February 2018 (the most recent data) only 1% took less than 3 weeks which tells us how quickly demand can change when faced with new competition from other buyers interested also purchasing their home or property).

Realtor.com reports: “432,000 new listings hit the national housing market in August,” an increase of 18 thousand over last year.” This means that there will still be a shortage on supply compared to demand for 2022 despite all these homes being built recently! CoreLogic reveals :

Home Price Appreciation Is Skyrocketing in 2021. What About 2022?

One of the major story lines over the last year is how well the residential real estate market performed. One key metric in the spotlight is home price appreciation. According to the latest indices, home prices are skyrocketing this year.

Here are the latest percentages showing the year-over-year increase in home price appreciation:

The dramatic increases are seen at every price point and in all regions of the country.

Increases Are Across Every Price Point

Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

According to the latest Home Price Index from CoreLogic, each price range is seeing at least a 19% increase year-over-year:

Increases Are Across Every Region in the Country

Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

Every region in the country is experiencing at least a 14.9% increase in home price appreciation, according to the Federal Housing Finance Agency (FHFA):

Increases Are Across Each of the Top 20 Metros in the Country

Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

According to the U.S. National Home Price Index from S&P Case-Shiller, every major metro is seeing at least a 13.3% growth in prices (see graph below):

What About Price Appreciation in 2022?

Prices are the result of the balance between supply and demand. The demand for single-family homes has been strong over the last 18 months. The supply of houses available for sale was near historic lows. However, there’s some good news on the supply side. Realtor.com reports:

“432,000 new listings hit the national housing market in August, an increase of 18,000 over last year.”

There will, however, still be a shortage of supply compared to demand in 2022. CoreLogic reveals:

“Given the widespread demand and considering the number of standalone homes built during the past decade, the single-family market is estimated to be undersupplied by 4.35 million units by 2022.”

Yet, most forecasts call for home price appreciation to moderate in 2022. The Home Price Expectation Survey, a survey of over 100 economists, investment strategists, and housing market analysts, calls for a 5.12% appreciation level next year. Here are the 2022 home appreciation forecasts from the four other major entities:

  1. The National Association of Realtors (NAR): 4.4%
  2. The Mortgage Bankers Association (MBA): 8.4%
  3. Fannie Mae: 5.1%
  4. Freddie Mac: 5.3%

The average annual price appreciation of 4.1% is expected to slow down in 2022, but it’s still set higher than the record highs reached at 8%, which could make for an interesting market outcome this year!
The recent benchmarks have proved that real estate values can exceed historical norms because there was more demand from investors and homeowners alike who are eager – if not desperate-to recoup their investment portfolios after paying off all debts as well buying another property or two where they live remotely while working overseas (or locally). The next few years look promising: current estimates show only increasing by less than 3%.

It’s not too late to buy a home! Home prices are forecasted to increase another 5% in 2022, which is quite substantial considering the wealth you just created over this past year. And with mortgage rates at historical lows and unemployment low as well it really pays off financially if you decide now is an excellent time for investing your money into real estate investments like buying homes or refinancing existing mortgages on them so they can be paid off faster while still getting more interest than what would have been possible otherwise because of their lower borrowing costs being made possible by recent Federal Reserve decisions aimed squarely at helping stimulate consumer demand through economic growth that has shown no signs yet though optimistic forecasts predict significant improvement will come soon enough.

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