It’s no secret that home buyers in the U.S. faced some tough times during 2021. There have been countless news stories about frustrated buyers struggling to find a house due to high competition and low inventory.
Many people are now wondering: Will 2022 be a good time to buy a house? Will it be any easier to buy a home in 2022, compared to what we’ve seen over the past year?
In other words: Is there any hope on the horizon for buyers in the U.S.?
The short answer is yes, in some ways it could get easier to buy a house in 2022. Next year could be a good time to buy a home, due to an ongoing rise in inventory. Lately, more and more properties have been coming onto the market. This could benefit buyers who plan to make a purchase in 2022.
There might be a bit less competition next year as well, since a lot of would-be buyers have been “priced out” of their local real estate markets.
But there’s a potential downside as well. While it might be easier to buy a house in 2022 from a competition and inventory standpoint, prices will likely be higher as well.
The takeaway: Will 2022 be a good year to buy a house? It could be. Buyers might have more properties to choose from next year, along with less competition from other buyers. But those who wait until next year to make a purchase could encounter higher housing costs as well. It’s a double-edged sword.
Will It Get Easier to Buy a House in 2022?
As of summer 2021, we are starting to see some indicators that it might be easier to buy a home in 2022 compared to now. The main reason has to do with supply levels.
Over the past year, the U.S. housing market has suffered from a chronic shortage of supply. There just haven’t been enough homes on the market to meet the demand from buyers. In some cities, it’s not even close.
But recent reports show an ongoing increase in the number of homes coming onto the market.
For instance, a July 2021 report from Zillow revealed that for-sale inventory rose by more than 3% from May to June of 2021. That was the second month in a row during which inventory rose. That’s a noteworthy statistic, because it marked the first time inventory had trended upward instead of downward.
If this trend continues to some degree, it could make it easier to buy a house in 2022. Buyers might not have to work so hard, or offer as much, in order to secure a suitable property. So in that regard, 2022 could be a good year to buy a house.
A Less ‘Crazy’ Real Estate Market Next Year?
There is a demand side to the equation as well. Housing market inventory growth could make it easier to buy a house next year. But what about demand? Will the real estate market remain hyper-competitive and overheated in 2022, as it has been over the past year or so?
Here again, there is some good news for home buyers.
A recent report from the U.S. Census Bureau showed a significant decline in home sales. According to their July 2021 report, sales of new single-family homes in the United States dropped by more than 6% in June 2021 compared to the previous month.
The year-over-year figure was even more significant. New home sales were down by nearly 20% in June 2021, compared to a year earlier.
This is just one of several reports that suggest home buyers might be backing away from the real estate market a bit. And who can blame them? We’ve heard countless stories of buyers failing to find a house within their budget.
Tight inventory conditions and cash-paying investors have intensified competition within the housing market. As a result, a lot of home buyers found themselves struggling with an uphill battle in 2021.
But getting back to the questions at hand. Will it be easier to buy a house in 2022? Will next year be a good time to buy a home in the U.S.?
If these supply and demand related trends continue the way they are now, the answer to both of these questions might be “yes.” It could very well get easier to buy a home in 2022, when compared to this year.
It stands to reason that an increase in inventory and a gradual decline in demand would work to a buyer’s advantage. It could give them more properties to choose from, while making the real estate market a bit less competitive.
Housing Costs Continue to Rise
Above, we have explained some of the reasons why 2022 might be a good year to buy a house. Supply growth along with a decline in home sales could make it easier to find and purchase a home in 2022.
But there’s another ominous shadow hanging over the heads of buyers. It’s the ongoing rise of housing costs. In most U.S. cities, house values continue to climb as of summer 2021. This is expected to continue through the end of this year and into 2022, to some degree.
Of course, real estate conditions can vary greatly from one city to the next. But for the most part, economists expect home prices across the U.S. to continue climbing into 2022.
For example, the real estate data company Zillow recently predicted that the median home value in the U.S. would rise by double digits over the next year. In early August 2021, the company’s website stated: “United States home values have gone up 15.0% over the past year and Zillow predicts they will rise 13.2% in the next year.”
Granted, that’s a forecast and not an absolute certainty. Predictions aren’t something you want to bank on. But the bottom line is that home prices will probably continue to rise in most U.S. cities well into 2022. Mortgage rates could go up as well, according to some recent forecasts.
For some buyers, an ongoing rise in prices could make it harder to buy a house in 2022.
So there are two sides to this question. From an inventory and competition standpoint, 2022 could be a good year to buy a home. Buyers might have an easier time making a purchase in 2022 compared to this year. At the same time, house values in most cities could be higher next year than they are right now. And that reduces purchasing power.
As you can see, it’s not an easy question to answer. There’s a lot to consider!