The past two years have been a wild ride for the U.S. real estate market, thanks to the onset of the COVID-19 pandemic. Although the pandemic brought much uncertainty to the world, its effects had reinvigorated the real estate market in 2020.
Despite the nationwide shortages that led to a surge in home selling value and a seller’s market, there have also been positive changes in the real estate market.
We’ve seen home appreciation soar in the double-digits, mortgage rates drop to historic lows, and consumers make an exodus from condo and apartment living to single-detached homes.
Now that the effects of the pandemic on the industry are starting to wane, what will come next?
U.S. Housing Market Predictions for 2022
The current market trends are still heavily influenced and impacted by the effects of the pandemic — from the soaring home values to the low mortgage rates. In the coming year, here are what experts are predicting.
Housing Prices Still Going Up
Goldman Sachs delivered both good and bad news for potential homebuyers.
To get the bad news out of the way first: expect the housing prices to continue their upward trajectory. The good news, though, is that the price increase is not expected to reach the levels it did this year.
U.S. home prices increases will slow down to 16% in the coming year. This is compared to the 20% it went up this 2021.
Home appreciation rates are also expected to continue rising. Online real estate marketplace giant Zillow predicts an 11.7% growth in the next 12 months. Meanwhile, median home prices would likely increase by 7.9% in the next twelve months.
Mortgage Rates Will Go Up
Many housing market forecasts agree that we will see mortgage rates rise further in 2022. The loan rates were at record lows this year as they periodically went below 3%.
This made it possible for buyers to afford homes despite the seller’s market and high house prices.
The latest data released by Freddie Mac this October 2021 noted that mortgage rates are already continuing their upward climb. This prediction is echoed by Fannie Mae, which predicts a 3.1% to 3.4% increase in the average 30-year fixed mortgage rate.
Better Housing Market Inventory
Industry experts are optimistic that there will be more real estate properties available come 2022. In its September report, Realtor.com noted that new properties have already started to enter the market in the third quarter of this year.
The report shows a 5% increase in new real estate listings last August 2021 compared to the same month in the prior year. Additionally, new listings in major housing markets, such as Columbus and Cleveland, already had at least a 20% increase.
Another factor that would contribute to the higher inventory is the expected boom in homebuilding.
Homebuilders already have a high confidence or builder sentiment score of 83 as early as April and May 2021. It is only the shortage of materials and high prices that were in the way.
With building materials and inventory expected to stabilize next year, house construction is also expected to grow.
Remote Working to Continue
The rise of the work from home setup was one of the factors that pushed people towards buying or renting more spacious homes in the suburbs.
Although some companies are already pushing to return to the office, surveys depict an opposite sentiment from employees.
One such survey from GoodHire showed that 85% of respondents prefer positions that come with either full or hybrid remote-work options. Similarly, a Gallup survey found that three in five people prefer working remotely even after the pandemic is resolved.
The continuing popularity and preference for remote working mean consumers would continue to find larger spaces more attractive.
This means people are likely to continue moving to the suburbs and buying or renting single-detached homes.
15 Hottest Cities for Real Estate Investments in 2022
The cities on our list are those that performed amazingly in the real estate market in 2020 and 2021, despite the COVID-19 pandemic.
The list is based on data and housing market predictions for 2022 reported in PwC’s Emerging Trends in Real Estate 2022.
One noticeable trend in the report is how southern and western real estate markets are growing faster than the eastern coast.
Moreover, large, expensive, and traditional investor favorite markets in the past years are noticeably absent in the top 10. This includes San Francisco, Los Angeles, and Manhattan.
Although Washington, D.C. made it into the list, it was still left out of the top 10.
Below is the list of the 15 cities that made it into the top-ranked real estate markets, starting at the bottom.
15. Miami, Florida
● Median house listing price: $450,000
● Median house sale price: $410,000
● Typical value of homes in 2021: $435,121
● Previous one-year change in home value: up by 15.5%
● Typical value of homes in 2020: $376,000
● Average time on the market: 54 days
● Real estate appreciation rate: 7.02% over the past 12 months
14. Washington, DC
● Median house listing price: $629,000
● Median house sale price: $627,000
● Typical value of homes in 2021: $698,414
● Previous one-year change in home value: up by 6.5%
● Typical value of homes in 2020: $655,000
● Average time on the market: 36 days
● Real estate appreciation rate: -4.08% over the past 12 months
13. San Diego, California
● Median house listing price: $775,000
● Median house sale price: $760,000
● Typical value of homes in 2021: $809,206
● Previous one-year change in home value: up by 25.9%
● Median value of homes in 2020: $675,000
● Median time on the market: 12 days
● Real estate appreciation rate: 9.31% over the past 12 months
12. Denver, Colorado
● Median house listing price: $545,000
● Median house sale price: $581,000
● Typical value of homes in 2021: $543,544
● Previous one-year change in home value: up by 13.3%
● Typical value of homes in 2020: $480,000
● Average time on the market: 24 days
● Real estate appreciation rate: 5.3% over the past 12 months
11. Salt Lake City, Utah
● Median house listing price: $500,000
● Median house sale price: $474,950
● Typical value of homes in 2021: $527,330
● Previous one-year change in home value: up by 21%
● Typical value of homes in 2020: $438,000
● Average time on the market: 6 days
● Real estate appreciation rate: 11.97% over the past 12 months
10. Boston, Massachusetts
● Median house listing price: $799,000
● Median house sale price: $725,000
● Typical value of homes in 2021: $693,096
● Previous one-year change in home value: up by 7.4%
● Typical value of homes in 2020: $648,000
● Average time on the market: 24 days
● Real estate appreciation rate: 5.71% over the past 12 months
9. Seattle, Washington
● Median house listing price: $760,000
● Median house sale price: $795,000
● Typical value of homes in 2021: $875,450
● Previous one-year change in home value: up by 12.3%
● Typical value of homes in 2020: $771,000
● Average time on the market: 7 days
● Real estate appreciation rate: 8.58% over the past 12 months
8. Atlanta, Georgia
● Median house listing price: $393,000
● Median house sale price: $347,500
● Typical value of homes in 2021: $308,095
● Previous one-year change in home value: up by 21.5%
● Typical value of homes in 2020: $256,000
● Median time on the market: 22 days
● Real estate appreciation rate: 6.02% over the past 12 months
7. Dallas/Fort Worth, Texas
● Median house listing price: $348,000
● Median house sale price: $324,400
● Typical value of homes in 2021: $265,627
● Previous one-year change in home value: up by 16.4%
● Typical value of homes in 2020: $229,000
● Total time on the market: 20 days
● Real estate appreciation rate: 19.4% over the past 12 months
6. Charlotte, North Carolina
● Median house listing price: $360,000
● Median house sale price: $345,000
● Typical value of homes in 2021: $319,335
● Previous one-year change in home value: up by 20.8%
● Typical value of homes in 2020: approximately $252,900 (based on 2021 data)
● Average time on the market: 13 days
● Real estate appreciation rate: 10.73% over the past 12 months
5. Tampa/St. Petersburg, Florida
● Median house listing price: $349,900
● Median house sale price: $320,000
● Typical value of homes in 2021: $303,374
● Previous one-year change in home value: up by 25.9%
● Typical value of homes in 2020: $243,000
● Average time on the market: 10 days
● Real estate appreciation rate: 9.86% over the past 12 months
4. Austin, Texas
● Median house listing price: $588,400
● Median house sale price: $540,000
● Typical value of homes in 2021: $448,406 to $596,446
● Previous one-year change in home value: up by 42.3%
● Typical value of homes in 2020: $344,000
● Average time on the market: 14 days
● Real estate appreciation rate: 6.20% over the past 12 months
3. Phoenix, Arizona
● Median house listing price: $405,000
● Median house sale price: $405,900
● Typical value of homes in 2021: $401,673
● Previous one-year change in home value: up by 31.8%
● Typical value of homes in 2020: $310,000
● Average time on the market: 25 days
● Real estate appreciation rate: 17.05% over the past 12 months
2. Raleigh/Durham, North Carolina
● Median house listing price: $360,000
● Median house sale price: $380,000
● Typical value of homes in 2021: $360,891 (not including homes in the upper price tier)
● Previous one-year change in home value: up by 20.5%
● Typical value of homes in 2020: approximately $286,900 (based on 2021 data)
● Average days on the market: 7 days
● Real estate appreciation rate: 8.31% over the past 12 months
1. Nashville, Tennessee
● Median house listing price: $399,900
● Median house sale price: $416,000
● Typical value of homes in 2021: $362,443
● Previous one-year change in home value: up by 17.7%
● Typical value of homes in 2020: approximately $298,000 (based on 2021 data)
● Average time on the market: 27 days
● Real estate appreciation rate: 6.7% over the past 12 months
A Cooling Yet Still Robust Housing Market
As the nation slowly starts to move on from the pandemic and its effects, expect to see the real estate housing market start to cool down. Not by much, though.
For people thinking of investing in the real estate market in 2022, whether it’s for a primary residence or an investment property, it’s still best to be cautious.
More houses are expected to enter the market next year. This may help shift the current seller’s market into one that favors buyers. When that happens, it’s best to have a clear idea of which housing market to invest in.
Take note, though, to take these housing market forecasts with a grain of salt. There is still a chance, however small, for the market to go the opposite way of all the predictions — similar to what happened during the start and peak of the pandemic.
