We all wish we could look into the future and know exactly what it holds. That’s impossible, of course, but thanks to some very clever forecasting, we can get a pretty good glimpse into local and national real estate in 2022.
Lawrence Yun, the National Association of Realtors’ chief economist and senior vice president of research, last week unveiled the consensus forecast during NAR’s third annual year-end Real Estate Forecast Summit, which focuses on the national landscape.
Yun, who has presented to Greater Chattanooga Realtors multiple times, says to expect slower housing price appreciation, easing inflation and rising interest rates in 2022.
This forecast is the consensus of more than 20 top U.S. economic and housing experts.
The group predicts annual median home prices will increase by 5.7%, inflation will rise 4% and the Federal Open Market Committee will increase the federal funds rate by 0.25% twice.
“Overall, survey participants believe we’ll see the housing market and broader economy normalize next year,” Yun says. “Though forecasted to rise 4%, inflation will decelerate after hefty gains in 2021, while home price increases are also expected to ease with an annual appreciation of less than 6%.
“Slowing price growth will partly be the consequence of interest rate hikes by the Federal Reserve Board.”
Yun forecasts the U.S. GDP will grow at the historical pace of 2.5%, barring any major, widespread transmission of the Omicron COVID-19 variant. He expects the 30-year fixed mortgage rate to increase to 3.5% as the Federal Reserve raises interest rates to control inflation, which is still lower than the pre-pandemic rate of 4%.
The housing market performed better than it has in 15 years in 2021, with an estimated 6 million existing-home sales. However, as mortgage rates tick up slightly, Yun predicts existing-home sales will decline to 5.9 million in 2022.
He also forecasts a modest increase in housing starts to 1.67 million as the pandemic’s supply chain backlogs subside.
Where does this forecast leave us locally? For the Chattanooga-area market in 2022, experts are projecting 3.7% home sales growth year-over-year and 6.9% home price growth year-over-year.
These numbers are helpful, but what can we take away from them? Simply put, they mean the market is looking to remain fast and robust but slowing down somewhat from the breakneck speed of the past year-and-a-half.
These predictions mean it will still be crucial to work with a Realtor who can maximize your chances of getting a jump on those properties that tend to sell quickly. Realtors work for their clients every day. That’s Who We R.
Founded in 1912, Greater Chattanooga Realtors is a regional organization with more than 2,500 members servicing Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in Northwest Georgia. The association is one of approximately 1,100 local associations and boards of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors owns and operates a Multiple Listing Service, which is one of approximately 600 MLSs in the country, and services more than 2,700 MLS users.