No doubt, the real estate scene in 2020 and 2021 was fast-moving, with both home values and sales surging to impressive numbers. With impending increases in mortgage rates as well as the end to many federal support and mortgage relief programs in the new year, the market will look a bit different around the end of 2022.

Here’s what the future holds for real estate in 2022, according to  Dr. Lawrence Yun, Chief Economist at the National Association of REALTORS® and industry leader, Brian Buffini, who’s renowned for his historically accurate market predictions.

1. Unemployment Rate is at Pre-Pandemic Levels

Dr. Yun noted in Buffini’s Bold Predictions that the unemployment rate had reverted to its pre-pandemic levels, but “we are still short by four million jobs.” He attributed the number to various factors, including stimulus money incentivizing workers to stay out of the job market as they looked for higher-paying opportunities.

2. Multiple Offers Still a Thing, But Not as Hectic

Looking at the real estate’s performance heading into 2022, Yun stated that the multiple-offer frenzy that took hold in the spring of 2021 had died down with homes on the market a bit longer than before—albeit they are still selling fast.

“People rushed to buy homes during the pandemic,” Yun said, pointing to a 7% increase in home sales from 2020 to 2021—from 5.7 million to 6 million, respectively. Yun predicted, however, that there will be a 2% reduction in sales this year as mortgage rates increase.

Buffini predicted that by the summer of 2022, there will be less over the top offers as first time homebuyers will be pushed to their max with increased mortgage rates and higher inflation.

3. More Inventory in Spring 2022

The housing shortage in conjunction with high buyer demand increased competition throughout 2020 and 2021, though new construction of single-family homes has been increasing, and it is predicted that there will be more inventory in the spring of 2022 as compared to last year. 

Yun also indicated that more people are likely to list their homes now that federal support and mortgage forbearance programs are either ended or are slated to end this year.

Photo by Greg Rivers on Unsplash

4. Mortgage Rates Will Tick Up to Nearly 4% by the End of 2022

Mortgage rates are predicted to climb to 3.7% by the end of 2022, affecting first-time homebuyers who may have been holding on getting in on the 2020 and 2021 market as they expected for prices to fall and/or the market to crash. Increased mortgage rates can make home buying unaffordable for some. 

5. Heavy Competition in the Summer of 2022

With core inflation just under 5%, Buffini indicated that demand for real estate would tick up as people look to hedge against higher inflation, resulting in heavy competition through the summertime.

“Those first-time buyers are eventually going to reach a cap because of inflation and a slightly increased interest rate,” Buffini said, adding that agents will likely see a mid-year slowdown in entry-level and “move-up” housing market activity.

6. High-End Real Estate Will Soar in 2022

High-end real estate will be the last to change, according to Buffini, who forecasted that the luxury home market will “continue to zoom all year long.”

To listen to Buffini’s full interview with Dr. Yun, head over to his podcast.