2022 Housing Market Predictions
The housing market is demonstrating signs of rebalancing, as evidenced by a steady pace of transactions and more moderate price growth in Oct/November. While the housing market remains largely a seller's market due to demand still outpacing supply, it is clear that things are changing. More homes are coming on the market, homes are remaining on the market for longer periods of time and the number of bidding wars has decreased significantly. Despite this, buyers must be prepared to act quickly, even if they get a few additional days to decide.
Housing Price Predictions
Forecasting home price appreciation is a challenging task. While inventory has increased slightly, it remains significantly below pre-pandemic levels and is simply unable to meet current demand. The latest housing news has Zillow revising its 2022 real estate forecast. They released a bullish 2022 forecast in September, predicting that home prices in the United States would rise another 11.7% over the next 12 months. However, the real estate listing site now claims that their previous forecast was too pessimistic. They published a new report predicting that home prices in the United States will increase 13.6% between October 2021 and October 2022. They also predicted that 2021 would end up at 19.5% from December 2020.
Freddie Mac expects housing prices to slow to 7.0% in 2022 but this is for the national average and not Los Angeles. As Los Angeles is a major metropolitan area, although house prices are forecasted to slow down the percentage will probably be higher than 7%, although how much higher, is still to be determined.
California Association of Realtors Forecast
Rising mortgage rates, a limited supply of homes for sale and a lack of homes affordable to most buyers “will likely curb median price growth,” the forecast said. But demand still will outstrip supply, creating more “upward pressure” on prices according to the California Association of Realtors (CAR).
In Los Angeles County, in October 2021, the median home price rose 10.5% from a year earlier to $790,000.
Mortgage Rates California Association of Realtors (CAR) economists project the average interest rate for a 30-year, fixed-rate mortgage will rise to 3.5% in 2022, up from this year’s projected rate of 3%. So far, this year’s rate has averaged 2.9%, but is expected to rise by year’s end.
Fannie Mae economists are forecasting that rates on 30-year mortgages will rise only modestly over the next two years, hitting 3.4% by the end of 2022 and then leveling off at 3.5% during the last nine months of 2023.