If you are in the market for a new home in 2022, you may be wondering whether the current high prices in the real estate market are sustainable. Might they shift downward in the near future? Andrew Shader, an expert in real estate investment and development, believes home prices will continue to rise throughout the year. However, rather than the 18% to 20% increases in housing prices that we saw in 2021, price growth will be more moderate.
Changes in Home Prices
It was certainly a seller’s market in 2021, as home real estate inventory was depressed and buyers engaged in bidding wars to purchase what was available at record-low interest rates. While real estate inventory has not returned to the market that we saw pre-pandemic, economists and real estate experts agree that inventory will continue to increase over the coming winter and spring months.
The inventory growth, combined with more potential buyers, will see housing prices continue to increase, just at a more moderate pace than what was seen in 2021.
A recent survey of forecasted housing prices anticipates an overall growth of home prices of 5.1% during 2022. This is on top of the growth experienced in 2021. No major experts in real estate anticipate a drop in real estate prices.
What Does This Mean for Potential Home Buyers?
Buyers interested in purchasing a home this year can expect prices to continue to rise. In addition, the Federal Reserve has signaled that it intends to raise interest rates to combat inflation.
Experts anticipate interest rates to increase from their current average of 3.2% to 3.7% by the end of the year. While the rise in interest rates and home prices will continue to make purchasing a home more expensive, the cost of the home is expected to hold its value and continue appreciating over time.
According to Andrew Shader, buyers can also expect more houses to choose from as home inventory increases over the coming months. People are becoming more comfortable with the pandemic and are more willing to make significant changes in their lives, such as selling their current home in favor of another one.
First-time homebuyers may seek less expensive options away from major metropolitan areas. The pandemic has led more companies to adopt a remote work strategy, allowing employees to be less tethered to communities near their offices. This trend will continue, and buyers may take advantage of lower prices in suburban areas throughout the Midwest and other parts of the country.
About Andrew Shader
Andrew Shader is a real estate investor, developer, and entrepreneur based out of Fort Lauderdale. Shader started as an entrepreneur in the insurance industry before discovering his real estate passion: finding scalability in any vertical. Andrew’s real estate strategy specializes in finding value-added properties and increasing their property value by upwards of 60% — without needing to rely on future appreciation.
