None of us have a crystal ball, and after the events in 2020, it is hard to predict too far out. With that being said, there are a few theories on what could happen if everything stays on track in regards to the housing market.
Strong Purchase Market
According to the market forecast from Mortgage Bankers Association, or the MBA, 2022 is projected to be the largest year for Home Purchases on record. This applies to both New Construction and Existing Home Sales. The Projections are that there will be nearly $1.8 billion dollars in Purchase Originations in 2022, which is roughly 8 percent higher than 2021 and 16 percent higher than 2020. Additionally, according to the US Census, more first-time homebuyers will be entering the market in 2022 than ever before, meaning demand will remain high.
Home Prices
It’s incredibly important to note that we are not in a housing bubble in which home values are expected to decline. Again, we are NOT expecting home values to decline in 2022. While according to realtor.com, home prices have soared into the near 20% range nationally over the last 12 months, this is not artificial inflation. While the MBA does expect the rates of inflation to stabilize closer to the 5-6 percent range there is no sign or prediction of declining home values in 2022.
Interest Rates
Rates are still expected to remain low. While we ended 2021 with a 30-yr fixed rate close to 3%, the MBA expects to see rates rise to closer to 4 percent by the end of 2022. 4% is unlikely and should not deter home buyers from purchasing homes as it is still an incredibly low rate when looking at it through a historic lens.
