Real Estate Trends That Will Dominate the Housing Market in 2022

For buyers, the real estate market in 2021 was like a high-speed rollercoaster ride. Despite the wild ride ahead, first-time buyers could find the market a little more relaxed.

In order to help you better understand how to purchase a home in the year ahead, we've identified trends that real estate agents expect will shape the market.

Here are the trends that will shape the home buying market in 2022, from the continued demand for more living space to first-time buyers snapping up vacation rentals.

The affordability of housing will be a mixed bag.

In 2021, historically low mortgage rates went below 3% at times, helping to offset increasing listing prices. Experts expect that both property prices and mortgage rates will rise in 2022. So too will income.

Mortgage rates are expected to linger at 3.3 percent in 2022, rising to 3.6 percent by the end of the year. Meanwhile, current home sales prices are expected to increase by 2.9 percent in 2022.

By the end of the year, the economy should have improved enough to propel income growth of 3.3 percent.

Advice for homebuyers:

Investigate lenders who offer a solid combination of cheap rates and low fees, then apply for mortgage pre-approval from at least three of them.

The outlook for homebuyers may improve, but it is still a seller's market.

Inventory will continue to be scarce, making 2022 a seller's market. Experts estimate that the market will recoup from its 2021 lows in 2022, with inventories increasing by 0.3 percent on average.

One good way to gauge the state of the market is to look at the average number of days a home has been on the market. Currently, homes are on the market for a median of 49 days.

Advice for homebuyers:

Allow yourself some leeway in terms of what you can afford so that, if necessary, you can over-ask for a property you prefer. Also, consider properties that have been on the market for more than 21 days.

 Second homes are the primary option for first-time buyers.

Before acquiring a permanent dwelling, Gen Z and Millennial buyers are interested in purchasing what is generally referred to as "second homes."

Many of these generations are no longer bound to big cities due to remote work and seeking more affordable places to live. In the meanwhile, owning a part-time holiday home or an investment property could help them develop equity.

Advice for homebuyers:

You'll almost certainly need a large down payment if you're planning to buy a rental property before a primary residence.

As a first-time buyer, you may be eligible for the FHA down payment of 3.5 percent, while most investment homes require a 20% to 25% down payment.

Buyers will have to make compromises.

It is still challenging to find properties that meet all of your criteria in this hyper-competitive market. Consequently, most buyers make one or more compromises whenever they purchase in a market like this.

Advice for homebuyers:

Make a list of vital characteristics, and if they're all equal in importance, apply the 80/20 rule. If you have certain higher-priority items, you should prioritize those and accept that the others will be a compromise.

Stay up to date with the Real Estate Trends with a professional realtor.

Whether you're selling or buying, working with a competent real estate agent can help you take advantage of current real estate market trends.