What the experts say you should expect from the Ann Arbor Housing Market in 2022
Here’s what experts from NAR, Redfin, Zillow, and Fannie Mae are predicting for the housing market in 2022. We feel Ann Arbor will continue to follow these trends. It will continue to be a seller’s market, with appreciation below last year’s level. We will be in a rising interest rate environment, and supply chain constraints will slow down construction and increase costs. Listings will rise as sellers finally take action to cash in on their expanded equity positions.
If you would like to discuss home buying and selling in today’s market, please reach out.
National Association of Realtors
“All markets are seeing strong conditions and home sales are the best they have been in 15 years, Yun said. “The housing sector’s success will continue, but I don’t expect next year’s performance to exceed this year’s.”
“With more housing inventory to hit the market, the intense multiple offers will start to ease,” Yun said. “Home prices will continue to rise but at
a slower pace.”
“Yun projected that mortgage rates, which are currently at 3.0%, will see an increase to 3.7% in the coming months, a rise he attributes to persistent high inflation. Home prices rose by 12% on average in 2020 and 2021, while inflation rose 3%.”
“Rising rents will continue to place upward pressures on inflation,” he said. “Nevertheless, real estate is a great hedge against inflation.”
“First, mortgage rates will rise to 3.6%, bringing price growth down to earth. Thanks to the pandemic subsiding and inflation lingering, Redfin expects 30-year fixed mortgage rates to rise slowly from 3% to 3.6% by the end of 2022. That would mean $100 more in mortgage payments for the median home.
[…]Secondly, new listings will hit a 10-year high in 2022, which will hardly make a dent in the ongoing supply shortage. The new listings will surpass the 2018 high of 7.6 million homes, setting a new record going back to at least 2012. As the market becomes more balanced buyers will find it less daunting to list their home while looking for a new one to buy. As a result, home-sale contingencies will become more common, allowing a homeowner to make an offer to buy a new home on the condition that their existing home sells first.”
“The economists predict that the current sellers’ market will continue into 2022, driven by the same factors that drove up home values by double-digit percentages in 2021: A tight supply of for-sale homes, plenty of millennial and baby boomer buyers competing for those homes, low mortgage rates, and a shift toward remote work that opens new possibilities for home shoppers.”
“Zillow economists predict that each of the top 10 markets will rise more than that, with Tampa, heading the list at 24.6%. After that comes Jacksonville, Raleigh, San Antonio, Charlotte, Nashville, Atlanta, Phoenix, Orlando and Austin.”
“Zillow sees New York, Milwaukee, San Francisco, Chicago and San Jose as the weakest out of the 50 largest U.S. metro areas. But even there, it expects home values to gain at least 10% in the 12 months through November, except in San Francisco, where the increase is forecast at 9.9%.”
“According to the latest forecast put out by Fannie Mae, median home prices are expected to rise 7.9% between the fourth quarter of 2021 and the fourth quarter of 2022. While that would mark a slowing from the extreme price growth we’ve seen this year, it would still represent strong growth by historical standards. (On average, U.S. home prices have climbed 4.1% on an annual basis since 1987.) So, put another way: The housing market, at least in the eyes of Fannie Mae, is set to return to a normal-ish level of price appreciation.”
“‘Mortgage rates may rise in response to the tighter environment, but we expect the severe shortage of homes for sale to remain the primary driver of strong house price appreciation through at least 2022, limiting interest rate effects on home sales and home prices,’ wrote Doug Duncan, chief economist at Fannie Mae, in its latest 2022 outlook.”
“While the ESR Group expects home price growth to decelerate moving into 2022 as the housing market cools from its recent highs, it did revise upward its home price growth forecast by 1.8 points to 16.6 percent for 2021 and 2.3 points to 7.4 percent for 2022, as measured by the FHFA Purchase-Only Index, in large part due to persistently tight inventory levels. New single-family home construction remains in high demand but is hindered by many of the same supply constraints, including the availability of both materials and skilled labor, both of which the ESR Group expects will remain obstacles to the delivery of new homes well into next year.”
“‘While we still view the supply chain disruptions and, to a lesser extent, labor market tightness as largely transitory, we now expect both to last even longer than we’d previously forecast – and also likely longer than the Federal Reserve anticipated,’ said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.”
“…Duncan continued. ‘Mortgage rates may rise in response to the tighter environment, but we expect the severe shortage of homes for sale to remain the primary driver of strong house price appreciation through at least 2022, limiting interest rate effects on home sales and home prices. Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low and supportive of mortgage demand and affordability.'”
“As far as 2022 outlooks go, Fannie Mae’s forecast is a Goldilocks—right in the middle. On the bullish end of the spectrum are Zillow and Goldman Sachs. In the coming 12 months, Zillow foresees U.S. home prices jumping 13.6%. Meanwhile, Goldman Sachs expects home prices to swing up a staggering 16% by the end of 2022. But not everyone sees the frenzy continuing: CoreLogic, a real estate data firm, is far more bearish—forecasting just 2.2% home price growth over the coming 12 months.”
“All of these forecasts should, of course, be taken with a grain of salt. After all, at the onset of the pandemic—when some states had banned in-person real estate viewings—CoreLogic forecast prices would fall 1.3% between April 2020 and April 2021. For that same 12-month period, Zillow predicted home prices would fall between 2% to 3%. Not only did the housing market not slide backward, it went on one of the biggest runs in U.S. history.”
If you would like to discuss home buying and selling in today’s market, please reach out!