What to expect in 2022 for the Ocean County Housing Market
Over the past two years the Covid-19 pandemic has upended the home-selling/buying process in Ocean County. Low mortgage rates coupled with an inventory shortage created a blistering hot market, with houses selling quickly, often for well over asking price.
Homebuyers will have a better chance to find a home in 2022 but will face a competitive seller’s market as first-time buyer demand outmatches the inventory recovery. Additionally, with listing prices, rents and mortgage rates all expected to climb while incomes rise, 2022 will present a mixed bag of housing affordability challenges and opportunities.
Why Is Housing Supply Still So Low?
- New Home Construction Fell Behind for Several Years - the level of new home construction has fallen off. For the last 13 straight years, builders haven't been able to construct enough homes to meet the historical average. That underbuilding left us with a multi-year inventory deficit going into the pandemic.
- The Pandemic's Impact on the Housing Market - when the pandemic hit, it fueled a renewed appreciation and focus on the meaning of home. Having space to live, work, school and exercise became even more important for Americans throughout the country. So, as mortgage rates dropped to at or below 3%, buyers eagerly entered the market looking to capitalize on those low rates to secure a home that would fulfill their changing needs. At the same time, sellers hesitated to put their houses on the market as concerns about the pandemic mounted. The result? The number of homes available for sale dropped even further.
Interest Rates Will Rise
The Federal Reserve is expected to raise interest rates a few times in 2022, which means mortgage rates will likely rise. Both Redfin and Realtor.com predict a 30-year-fixed mortgage rate will reach at least 3.60% by the end of 2022, compared to an average of 3.30% now.
Homeowners who are ready to sell in 2022 are in a good position. Home prices are likely to see a decade-long streak of annual gains early in the year and likely to continue higher. Even as for-sale inventory begins to grow, meaning some sellers will face competition, well-priced homes in good condition will continue to sell quickly. And for sellers who have owned their homes for a while, this will likely mean that they walk away from the transaction with a healthy amount of cash. While surveys show that many sellers recognize the advantage they hold in the current housing market, other data show that it’s the challenge of buying that is holding some back.
The sellers most poised to take advantage of this market are those who don’t also need to buy immediately–those ready to sell second or vacation homes, but with some offices opening back up even as other companies shift to indefinite remote work policies, homeowners in vacation markets may find a notably cooler market than prevailed in these areas in 2021 when vacation home sales surged and surfaced unexpected vacation towns.
Homebuyers have something to look forward to in 2022. After years of declining, the inventory of homes for sale is finally expected to rebound from all-time lows. Still, the housing market will remain competitive for buyers, particularly those looking for homes in entry-level price tiers.
Plenty of buyers mean rising home prices and when combined with rising mortgage rates buyers will face higher monthly payments. On top of this, homes are expected to continue to sell quickly, meaning buyers will need to make quick decisions to win offers.
There is some good news. Experts are projecting more homes will soon become available thanks to sellers re-entering the market. Danielle Hale, Chief Economist at realtor.com, shares this hope, but offers perspective:
“We expect that we'll start to see a turnaround and inventory will stabilize and start to go up a little bit in 2022. . . . But that means we're looking at inventory levels of roughly half of what we saw before the pandemic. For buyers, the market is likely to continue to move fast. If you see a home you like, you want to jump on it right away.”
The housing market has been breaking new records across multiple fronts throughout 2021. Depending on whether you’re the buyer or seller, you might be very happy or very disappointed to learn that home prices are poised to rise in 2022. While headwinds like rising mortgage rates and a significant uptick in Covid-19 cases may impede price growth, they won’t stop home price appreciation from climbing. In other words,
if you’re thinking of buying, the sooner the better may work so you can capitalize on the tail-end of a booming market. If you’re thinking of selling, we may be reaching the height of the market, so now be the optimum time to put your home on the market.
Karl Hess provides expert real estate services to residential buyers and sellers in Ocean County. Contact us today for more information on Ocean County Real Estate and for professional assistance navigating this complex home market.