What Will Happen to the Housing Market in 2022?
As we head into a new year, many people are asking “What Will Happen to the Housing Market in 2022?” The past two years have been quite a ride – both in the housing market and outside as well. Of course, nobody can predict the future, but we can look at some data to try and make some guesses. 2022 is looking like it could go many ways. There are several forces at play that could make massive shifts in how the year ends up.
At a recent Federal Reserve meeting, 12 out of the 18 members said they expect at least three rate hikes next year. This makes sense because of how low rates have remained for a while. Rising interest rates will pressure on borrowing costs for both developers and homebuyers. In turn, we may see the high prices for homes come down a bit. Obviously, if you are looking to sell a property, it would make sense to do so before this happens. As a buyer, it will depend if you would rather pay a higher interest rate or a higher home price.
In 2022, inflation is expected to cool a bit. Current estimates predict inflation to rise 2.5 – 3%. However, that’s on top of what has been a year of monster inflation already, with 2021 likely ending somewhere around 6%.
According to Realtor.com, home prices in Philadelphia are expected to rise a modest 2.9% next year. However, rent growth, which was up 11% from last year in the Greater Philadelphia Area, is expected to outpace home prices. Rent outpacing home price growth is also a national trend predicted for 2022. The real question is: will wage growth keep up?
So, what does this all mean? Well, pandemic aside, it sounds like increased borrowing costs and mild inflation, countered by more reasonable housing prices and strong rent growth. Will 2022 actually play out this way? Given history, doubtful.
How This Applies to You, A Home or Property Seller
How you interpret the predictions will determine your outlook for 2022. For example, how much importance do you put on a potential rate increase versus inflation? As always, take our opinion with a grain of salt – but let’s look at some possibilities.
If you own a house in the Greater Philadelphia Area, you could do a few things. Increasing inflation would drive housing prices up further, but rentals would go up even more. So, if you have the ability to rent out your home, this could be a great time. However, if you’ve been sitting on a property that is in need of repair or updates, it may be a great time to sell now.
It does seem that house prices may start to top out a bit in 2022, or at least not grow as fast as 2021. A 3% rise in the price of your Philadelphia or New Jersey property is still positive, but not as fast as last year. If prices of houses level off, there may be more buyers out there, which will lead to more competition among sellers.
Would you like to talk more about the housing market in the Philadelphia area or even New Jersey? As always, we are here to help. If you have any more questions about the home buying or selling process, call us today at 215-770-3122 or send us a message online. Remember, we are the premier, local house buying experts in the Greater Philadelphia Area as well as New Jersey!