No doubt about it: The 2022 housing market has had a wild start. Check out these trends to learn what experts predict this year.
Climate risks may factor into buying choices
Homeowners are caring more about how climate risks could affect their overall costs (e.g., floods and wildfires). According to Redfin, the uptick in natural disasters due to climate change may start to weigh heavily on buyers’ minds. These considerations may influence housing policies as local, state, and federal governments grapple with how much to invest in climate-resilient infrastructure and communities.
Rates may rise, but remain historically low
Examining mortgage rate trends over the last 20 years shows a steady decline, dropping from 8.05% in 2000 to 3.76% last month, according to Freddie Mac’s 30-year fixed-rate mortgages timeline. That said, rates have been slowly rising and will continue to do so as the economy stabilizes.
‘Second homes’ could take off among younger buyers
Remote work culture has allowed homebuyers to adjust their needs to align with more flexible lifestyles. According to Zillow, millennials and older Gen Zers who move to more affordable housing markets may stay skittish about committing to new cities full-time. Younger buyers may move away from purchasing a primary residence and choose a part-time vacation home or investment property that allows them to build equity and create additional income sources until they’re ready to make a more permanent move.
Housing affordability may not budge
Prices have steadily increased since 2012, with an even bigger boost thanks to an unpredictable surge in demand over the last two years. Skyrocketing demand clashed with the limited housing supply and pushed prices higher amid a pandemic-era housing market. Economists expect the price surge to continue, making it harder for Americans to afford homes. Builders are increasing production to meet the groundswell in demand, but buyers are likely to remain left contending with rising prices and mortgage rates.
Hungry for more info? Check out a recent HousingWire podcast featuring economists and analysts from across the housing industry talking about inventory, price appreciation, financial indicators, and more.