The residential housing market through 2020 and 2021 was brutal for home buyers. Home prices skyrocketed due to a lack of inventory. Then things got really out of hand when supply chain issues pushed home prices up even more. Homebuyers, both new construction and resale, lost their motivation to buy and many postponed their home-buying plans.
But 2022 looks to be a different animal. The Federal Reserve implemented aggressive policies to slow inflation, which motivated lenders to raise their mortgage rates. Those rates are still rising and probably will throughout the year at a slow but steady rate.
Home-buyers Are Back
But the desire to buy a home breathes on. Would-be homeowners are chomping at the bit to get in on the action so you can count on the demand to remain high as the construction industry tries to catch up.
Supply is still low, but not as low as last summer and it’s expected to catch up during the year. And because of the slowdown, home prices should mellow, giving buyers more wind in their sails. The big difference is home prices won’t continue to escalate at the rate they did over the past 18 months, giving home buyers more room financially to bid on the homes they love.
Also, even with the supply chain logjams, new home construction continues, just not at the break-neck pace of the past six quarters. The same is true for resale homes – look for a steady supply of listings in 2022.
The Frenzy Cools But the Market Wins
Yes, things have slowed down substantially since last summer in the market, but that’s not necessarily a bad thing. With new starts slowing down a bit and lenders increasing their rates, you can expect the “frenzy” to end. In 2022, the market will normalize, meaning those who are in the market are qualified and ready to buy or sell for the right reasons, not just because the market is “hot!”
Honestly, when buyers and builders took a break in early fall, it may have had the added benefit of contributing to the cooling of the market – in a good way. Everyone had to take a moment to reassess what was happening, which gave supply chains a chance to catch up, building permits to be issued, and inventory time to fill in. That breather helped ease the cost of raw lumber as the demand dropped off, as well.
A Healthy Housing Market for 2022
As we slide into 2022, the residential market is still healthy, but not bursting. That’s a great sign that things could be getting back to something closer to normal. The mortgage rates will continue to rise, but the demand is not expected to fall off. With fewer people flooding the market, 2022 should be a healthy year for everyone.
If you’re looking to do renovations to your home, whether to sell or because it’s time to upgrade your living space, costs have increased somewhat, but the wait times are much better. You can safely plan your projects with more reasonable completion times than they were a year ago. So, now’s the time to get your project going.
If it’s time to renovate your home, Nance Construction can get your project from dream to complete. We will work with you every step of the way to make sure your renovation is exactly what you want. Contact us today to schedule your initial planning session.