It occurred to us as we head into the holiday season, that our recent market coverage content is similar to A Christmas Carol by Charles Dickens. A cautionary tale for the Seller waiting for prices to rise another 15-20%. While home prices continue trending upwards right now, they are decelerating or slowing as the Fed has made it clear that it intends to raise interest rates in the next few months. For those looking to sell their home and buy another, sooner may be better than later before rates start to increase. But you do not have to take our word for it. This week, we assembled the top real estate expert predictions for the housing market in 2022.

In our research we came across a wide array of “expert” opinions on the real estate market. Which should you trust? Which will prove true for the Raleigh Durham real estate market? We have been assisting buyers and sellers and staying on top of trends in housing for the past 20 plus years and we think the following forecasts hold the most weight and should influence your real estate decisions in the 2022 year.

Home Price Growth Likely to Slow

The home price increases in 2021 were astronomical in many markets. Between 16-19% increases were the result of supply shortages and demand for single family homes in low density areas. Raleigh Durham has an incredible job market coupled with comparatively low density living and was one of the areas to witness home prices surging. However, in 2022, this incredible growth is predicted to slow due to more inventory coming on the market. We have a huge selection of new homes being developed in the area, in addition there’s a strong sense that there will be many more sellers coming to the market as well. Here are the expert opinions supporting this.

Redfin Chief Economist Daryl Fairweather asserts:

"If annual price appreciation falls to 3% [in 2022], it would only be the second time it will have fallen so low since the end of the housing crash in March 2012. This low price growth will likely discourage speculators from entering the market and allow more first-time buyers to have a chance at winning a home."

Further, a forecast issued earlier this month from Fannie Mae predicted that prices would rise by about 7.8% in 2022. Lastly, Zillow predicted that home values in the U.S. would rise by 13.6% through September 2022. All experts agree that home prices will continue to rise, but to what degree? We are urging our buyers or sellers who need/want to move to a different home, to make a move now, before borrowing and buying become more expensive.

Higher Priced Inventory Increases

Experts seem to agree that we will be seeing more housing inventory, but they also agree that the homes will not be low priced or starter homes. According to Ali Wolf, chief economist for the homebuilding research company Zonda:

"New home inventory should increase from 2021’s bottom, but we anticipate the market will remain undersupplied [in 2022]. Entry-level home supply in particular will remain extremely constrained. I can’t imagine we get to a point where we are flush with entry-level homes."

So how do we increase inventory and what are builders supplying? Inventory increases when sellers come to the market, either to take advantage of market conditions, or via distressed conditions, OR builders introduce more supply to the market. Right now, in The Triangle, we are not seeing many more homes come to the market. We are anticipating that once we get into 2022 that we will be seeing more Sellers listing though it’s highly unlikely that they will meet the need for start homes priced in the $250,000 - $350,000 range. Nor does it appear that there will be a significant number of distressed properties coming on the market which would help lower the average home's cost.

Higher Mortgage Rates

There is a lot of buzz about mortgage rates, and we did our best to report the rate information, as it pertained to the Raleigh Durham market, and the experts agree that mortgage rates look like they will go up in 2022. Keep in mind, when we discuss the rates moving up, they are also historically low, so it really is a good time to buy. Here are is what we know; ,the average rate for a 30-year fixed mortgage had climbed above 3% for the first time in months and is expected to go even higher in 2022, according to numerous real estate market predictions including, The Mortgage Bankers Association who posited that rates could approach 4% by the end of 2022. Below are the rest of the predictions from this report,

  • A new mortgage forecast suggested we could see higher rates in 2022.
  • The MBA predicted 30-year loan rates could hit 4% by the end of 2022.
  • They expect mortgage refinancing to drop off considerably, as a result.
  • Surprisingly, the group predicted an increase in purchase loans next year 

If you are considering buying or selling, you should take advantage of the price of borrowing now before rates start their inevitable climb up.

More Space and More Affordable Living

The experts indicate that the Raleigh-Durham (Research Triangle) area is the second fastest growing metropolitan area in the US, with 70+ percent of the growth coming from people migrating here from other areas. They predict this growth from people migrating to the area will continue in 2022. According to Redfins real estate predictions for 2022:"cost-conscious homebuyers will seek out affordable northern cities like Columbus, OH, Harrisburg, PA and Indianapolis, which all happen to be capital cities with highly educated residents where the median home price is still less than $250,000." Other than median home price The Raleigh Durham and Chapel Hill area ticks all the boxes other than pricing. (Average home prices in 2021 in the Research Triangle Area came in at $372,500) However none of the mentioned areas offer comparable amenities or job markets. In terms of culture and education, proximity to the mountains and the ocean, the Research Triangle area offers more than any other east coast metropolitan area in terms of real estate.

With the strict office model becoming less dominant with the rise of hybrid models we are surely going to see more fluctuations in terms of buyer preferences and the type of inventory that hits the market. The Raleigh, Durham and Chapel Hill market will continue to see people looking to move to the here in 2022.

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Posted by Larry Tollen on
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