While it’s unclear how long-lasting the effects of the pandemic on the housing market, Zillow has eight 2022 housing predictions. Though the market may not reach the same acme as 2021’s market, it won’t be a slow year by any means, says Zillow. The sellers market will persevere, the Sun Belt states will remain in-demand as a region, and ever-evolving work conditions will continue to inform housing choices in the coming year.
Below, eight 2022 housing predictions as per Zillow…
2022 Will Be Nearly Record-Breaking
Depending on who you ask and how it’s being measured— including Zillow’s own Home Value Index— the 2021 housing market was scorching hot. We may not see the numbers reach the same heights, but 2022 will by no means be a slow year, especially with price growth and sales volumes.
Zillow is forecasting an 11% home value jump in the year ahead, despite that being down from 2021’s 19.5% projection. Current homes are predicted to total over 6.3 million, as opposed to 2021’s 6.12 million, which would be the highest number of sales in a year since 2006.
Sellers Market Will Reign
While 2020 saw the usual seasonal housing market cooldown take a break, 2021 has seen its return. Fewer homes are selling above listing price— in fact, more sellers are cutting their prices— and homes are remaining on the market for longer than they did during the summer.
Just because things are slowing down doesn’t mean we can expect a buyers market in 2022. Supply vs. demand, remote working, and low mortgage rates will continue to give sellers the advantage. Be prepared for bidding wars, especially during spring and summer seasons.
Rent Big and Go Home
With home prices continuing to soar, look to renting larger properties to soar in kind. Rising costs make saving for a down payment more difficult, so people are renting more than ever, even with climbing rent prices. The demand for larger rentals— including single-family homes— will keep families in the rental realm longer.
Sun Belt Surge and Ripple Effect
With more people spending time at home during the pandemic, choosing to live in a favorable climate has become a priority. The southern states across the country— including Arizona— are seeing substantial population and home value growth, to a great degree due to long-distance movers. 2022 will see this trend continue. Furthermore, as major markets see price hikes, more cost-effective areas will become more enticing.
Younger Generations Skipping “First” Homes
The workplace has gone through a complete revolution in the last couple years, with employers and employees shifting to a work-from-home protocol. As a result, with the ability to work from anywhere with Internet access, many Gen Z-ers and Millennials are purchasing what is commonly a second home— i.e. a part-time vacation home or an investment property— before purchasing a primary residence. With these generations more tech-savvy (using virtual shopping tools including 3D home tours), they’re able to watch the market in affordable areas and purchase from a distance and dip their toes into the home ownership arena when mortgage rates are low, and even going in with friends to shoulder the financial burden, allowing for early equity building, continuing into 2022.
Renovation Boom Echoing On and On and On…
Workplaces changing location to the home, a competitive Covid-induced housing market, and people spending so much more time at home, homeowners are pouring more and more money into remodels and improvements as they bide time before reentering the market to trade up.
Top projects to come in 2022 from a Zillow survey, folks are redoing a bathroom (52%) or kitchen (46%), adding or upgrading a home office (31%), finishing a basement or attic (23%), adding a room (23%), and adding a separate dwelling unit (21%).
Work From Home a Factor
Flexible work options contributing to shorter-to-no commute have driven buyers from paying premiums to live downtown near workplaces to more affordable and larger dwellings in wider-spread areas. Expect to see hybrid and fully remote employment to reshape the in-demand locations in the coming year, depending on how long-lasting the effects of the pandemic are felt.
New Construction Will Be Small Potatoes
Increasing home prices makes sense from an Econ 101 perspective: high demand and low supply. Zillow analysis shows in the 35 largest housing markets alone, there has been a shortfall of 1.35 million new homes since 2008 because of a construction slowdown following the housing crash. Builders are doing all they can to get houses up, but supply chain snags and labor shortages are limiting progress. The gap shrunk in 2021 and will likely shrink again in 2022, but the housing shortage will be a defining feature of the market once again next year.
Will these eight 2022 housing predictions come true? We’ll see very soon. In the meantime, drop your 2022 housing predictions in the comments.