YOUNGSTOWN, Ohio (WKBN) — Many buyers who were squeezed out of the 2021 housing market are looking to 2022 for calmer seas. Whether that will happen remains to be seen.
Last year was a banner year, with the average house price rising nearly 20%. Homes were flying off the market with multiple offers, no inspections, and buyers paying more than they asked. But this frenzy has caused a lot of weariness and a lot more suffering with buyer’s remorse.
According to a Bankrate survey, 64% of millennials, who drove much of the housing market in 2021, say they regret their property purchase in one form or another. Many said they thought they were paying too much or hadn’t gotten the best mortgage rate possible. They also said the cost of home ownership was higher than they expected. Slowing down would have helped.
Remorse among Gen X shoppers (those aged 41-56) was less than 45%, and for those over 57, it was the lowest of all at 33%.
As 2021 comes out, many buyers are scrambling and waiting for what 2022 will bring. Mortgage rates have already increased, slightly, and this increase should increase over the next few months.
Some experts say the real estate market peaked in 2021 and others say 2022 could be even hotter. However, a record 26% of consumers believe now is the right time to buy a home, according to Fannie Mae’s Home Buying Sentiment Index for December.
“Over the past year, low mortgage rates and government stimulus programs have helped boost demand for mortgages, but overbidding for homes has driven prices to record highs, making affordability a greater constraint for first-time homeowners and first-time buyers. Among homeowners, “good time to buy” sentiment has fallen 30 percentage points over the past year to its current level of 30%; for tenants, it fell from 37% to 21%. Even though demand remains strong, a majority of consumers clearly have reservations about buying a home at current prices,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
Rising mortgage rates and inflation concerns will impact affordability well into 2022, but this could free up some properties as more buyers pull back.
Fannie Mae says more new homes are expected to come on the market in 2022, which should relieve inventory, but that may not be enough to have a significant impact on home prices.
Affordability will continue to be a challenge in 2022, Duncan said.
The good news is that a “new normal” is on the horizon. While inflation is expected to remain elevated, growth in home sales and prices will slow to a more sustainable pace. The latest forecast calls for house price appreciation to reach a still high rate of 7.6% in 2022 – as measured by the FHFA Buys Index only – but down sharply from 17.3 % expected for 2021.
The consensus across the industry is that even if property prices stabilize, they are unlikely to decline substantially as supply and demand will remain a component through 2022.