HOUSTON – (By Dale King, Realty News Report) – With 2022 fast approaching, Realtor.com projects a strong housing year ahead, forecasting that home sales could reach a 16-year high and that trends like workplace flexibility will help more buyers succeed.
Realtor.com’s 2022 Housing Forecast says Americans will have improved chances of finding homes next year, but buyers should still expect a competitive seller’s market as demand from first-time buyers outpaces the recovery of inventory.
The forecast also warns of mixed affordability outcomes: listing prices, rents and mortgage rates are all expected to climb alongside personal incomes, creating both challenges and opportunities for prospective buyers in 2022.
Realtor.com’s projections show wages rising about 3.3 percent, while mortgage rates could increase to roughly 3.6 percent and rents may surge around 7.1 percent—outpacing wage gains. At the same time, listing prices are expected to rise by about 2.9 percent.
The report ranks the six largest Texas metro areas favorably for next year’s market, with all six expected to see positive results. El Paso tops the list among Texas metros, while Houston ranks sixth among the state’s largest markets in Realtor.com’s outlook for the 100 largest U.S. metros.
El Paso is projected to lead Texas with a year-over-year sales increase of 10.6 percent and home price growth of 4.2 percent.
The Dallas–Fort Worth–Arlington area follows, with anticipated sales growth of 8.3 percent and price increases near 4 percent. The McAllen–Edinburg–Mission region is forecast to see sales rise 5.9 percent and prices climb about 5.1 percent.
San Antonio–New Braunfels is expected to place fourth among Texas metros, with sales up an estimated 5.1 percent and home prices rising roughly 3.5 percent.
Realtor.com predicts the fast-paced Austin market will cool somewhat in 2022: sales are expected to increase about 4.7 percent in the Austin–Round Rock area, with home prices gaining approximately 3 percent.
Houston Home Prices to Rise 2.4 Percent in 2022
The Houston–The Woodlands–Sugar Land metro is forecast to see a modest 2.6 percent rise in sales and a 2.4 percent increase in home prices in 2022.
These generally positive rankings stand in contrast to many other U.S. metros where Realtor.com expects declines. Several large regions, including Chicago–Naperville–Elgin (-2.6 percent), New York–Newark–Jersey City (-3 percent) and urban Honolulu (-3.9 percent), are projected to see lower sales next year. Even parts of Florida such as Cape Coral–Fort Myers may face declines, with sales possibly down about 5.6 percent.
At least five California metros are expected to dip below zero as well, including Los Angeles–Long Beach–Anaheim (-1.6 percent) and San Francisco–Oakland–Hayward (-5.6 percent) for 2022.
“Americans are poised for a whirlwind year of home buying in 2022,” said Realtor.com Chief Economist Danielle Hale. “With more sellers expected to enter the market as buyer competition remains fierce, we anticipate strong home sales growth at a more sustainable pace than in 2021.”
Hale added that affordability will become more of a challenge as interest rates and prices rise, but that remote work could expand buyers’ search areas and help younger buyers find their first homes sooner than they might have otherwise. She noted that more than 45 million millennials are in the prime first-time buyer ages of 26–35 heading into 2022, which should help keep the market competitive.
Realtor.com cautions that while historically low mortgage rates in 2021 helped buyers manage monthly housing costs, rising rates and continued price growth will make affordability an important issue in 2022.
Still, several trends could help maintain homeownership access for many buyers: projected income growth of about 3.3 percent by year’s end, and falling unemployment—expected to drop from roughly 4.8 percent in late 2021 to about 3.5 percent in the same period of 2022.
Changes in workplace dynamics will also shape the housing market. As employees gain more leverage to negotiate flexible work arrangements, many buyers may consider lower-priced markets farther from expensive urban centers—expanding where people look for homes and creating new opportunities for homeownership.
The report notes that nearly one in five prospective sellers (19 percent) say they are looking to move because they no longer need to live close to the office, up from about 6 percent in the spring. Realtor.com expects for-sale home supply to begin a gradual recovery in 2022, with inventory up around 0.3 percent, but strong millennial demand may keep supply constrained through at least 2025.
Dec. 2, 2021 Realty News Report. Copyright 2021.
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