2022 Real Estate Market Forecast
Q: What should we expect in housing in 2022? Julie, Bayonne, NJ
A: The Omicron covid-19 variant looms large over the economy overall in early 2022 and will likely extend the supply chain disruptions we’ve seen throughout the pandemic. Mortgage rates are likely to be volatile this year and if and when mortgage rates increase, it will in turn reduce housing affordability and likely increase rents. Personal incomes are rising massively and will likely continue to increase—personal incomes more than anything else drives housing markets because personal incomes are what allows home buyers to qualify for and pay down mortgages. Home sales are likely to increase in 2022 but at a slower pace than in 2020 or 2021 and home prices are likely to increase in 2022 but also at a much lower pace, which is good–the annual double-digit increases in home prices we’ve seen during the pandemic are not sustainable because in the long run, home prices can only be as high as homeowners can afford to pay. Vacation home markets are likely to do well this year as more people work remotely and because many of these housing markets in NJ in shore towns for example have underperformed since the global financial crisis and hurricane Sandy. Housing supply, although still very low historically, has inched up recently. As more people get vaccinated, increased immunity will increase home listing supply as people get more comfortable putting their homes on the market for sale which is one of the factors that should slow home price growth. Thanks for your question, Julie.
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