As the days grow shorter and the year draws to a close, the real estate market is heading full-steam into 2022 and bringing record high prices with it.
Looking ahead to 2022, Zillow has released a list of predictions about what one could expect in the near future after seeing a record-setting year in housing that shows no signs of slowing.
As a whole, Zillow’s economists expect 2022 to remain short of 2021, but they still expect the market to remain incredibly strong in terms of price growth and sales volume.
Their experts predict a 11% home growth value for the year, much less than the estimated annualized 19.5% growth rate seen this year, and expect that a total of 6.35 million existing homes will be sold on the market compared to the 6.12 million that are expected to be sold by the end of the year. This would be the highest number of homes sold since the Great Recession.
Sellers are also expected to hold all the cards next year as limited inventory will continue to create bidding wars, which in turn will drive up prices. But inventory is not the only thing that will keep prices high—years of under building by developers, elevated demand due to remote work, and low mortgage rates are all contributing factors.
Zillow also expects rental properties will become more popular as rising home prices push many out of the market.
“After a slowdown in the early months of the pandemic, rent prices came roaring back, especially in what were previously some of the most affordable markets,” Zillow said. “As rising costs make it harder to save for a down payment, expect demand for larger rentals to increase, including for single-family homes, as families stay in the rental market longer.”
“Americans are taking advantage of remote work flexibility to move to larger homes in more-affordable markets, but many will not want to commit to a new location full-time,” Zillow continued. “This is often true for younger people who are attracted to the amenities of living in a city, where expensive housing is more likely to put homeownership out of reach. With these factors in play, there may be more people buying what’s traditionally a second home—either a part-time vacation home or an investment property—before they buy a home as a primary residence.”
“Young people today are savvy watchers of the housing market, in part because of time spent ‘Zillow surfing.’ Purchasing a ‘second’ home in a market more affordable than the one they live in is a way to break into the market and start building equity while mortgage rates are low, possibly teaming up with friends or family to lessen the financial burden. Virtual home shopping tools available today, such as Zillow 3D Home tours, make buying a home in a far-flung location easier.”
Amid supply chain problems, the home renovation boom shows no signs of slowing next year as well. Citing a recent survey, Zillow said that three-quarters of surveyed homeowners were considering at least one home improvement project next year. The top projects on their to-do list are renovating a bathroom (52%) or kitchen (46%), adding or improving a home office space (31%), finishing a basement or attic (23%), adding a room (23%) or adding a separate dwelling unit (21%).