A Look at Home Price Forecasts for 2022

Buying a house is a subjective process that depends more on personal finances than market conditions.

Through-the-roof housing prices prevailed during the pandemic, notes a recent article at Fortune, driven by low interest rates; large demand by first-time homebuyers; and the impact of remote work that allowed consumers to relocate to places far from their offices.

Plus, the lag in new construction—5.5 million fewer homes short of historical levels—didn’t help to mitigate rising home prices either.

Fortune reviewed seven home pricing forecasts and discovered that “buyers and sellers alike won’t get much peace of mind…The economic models don’t produce anything close to a consensus.”

Here’s what Fortune found:

·         Zillow and Goldman Sachs anticipate “priced out buyers falling further behind next year.” Zillow predicts home prices will go up 13.6% from October 2021 and October 2022.  Goldman Sachs suggests price tags from October 2021 through December 2022 will be up 16%.

·         Fannie Mae and Freddie Mac have a more optimistic view, predicting that home prices will rise only 7-7.9%.  These figures, though above historical rates, don’t come close to the skyrocketing home price increases of the pandemic.

·         Redfin and CoreLogic believe prices will fall in the upcoming year, down 3% and 1.9%, respectively.

·         The Mortgage Bankers Association, too, suggests prices will drop—an expected decline of 2.5% between Q4 2021 and Q4 2022.  This group reports that on average, the 30-fixed mortgage rate will climb to 4% by year-end, adding $90,000 to the price tag of today’s $500,000 fixed rate mortgage.  Still, even with this scenario, home prices would reflect a 20% hike over prepandemic costs.

So, is now the right time to buy?

According to Jon Meyer, a loan expert at The Mortgage Reports, buying a house is a subjective process more dependent on the consumer’s personal finances than market conditions.

“While it’s always nice to get a better rate and have a smaller total monthly payment,” he says, “if you can afford the home it’s never a bad time to buy.”

Three tips for potential buyers:

·         As home prices continue to climb “it makes sense to buy sooner rather than later if you can afford to do so.”

·         Don’t wait for home prices to drop.  Although home prices could slow in 2022, they won’t go in reverse.

·         Don’t be deterred by higher interest rates.  Even rates of 4% remain below historic averages.

Post authored by Lora Bray.

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