In 2021, home prices are expected to skyrocket. What about the year 2022?
The performance of the residential real estate market has been one of the primary narrative lines over the last year. Home price appreciation is one crucial metric in the focus. Home prices are expected to rise this year, according to the latest indices.
Here are the most recent percentages showing home price appreciation year over year:
- The Federal Housing Finance Agency's (FHFA) House Price Index (HPI) is 18.8 percent.
- S&P Case-National Shiller's Home Price Index: 18.6 percent
- CoreLogic's Home Price Insights Report shows that home prices are up 18 percent.
At every price point and in every part of the country, significant increases are visible.
Every price point has seen an increase.
According to CoreLogic's latest Home Price Index, each price category has increased by at least 19 percent year over year:
There are increases in every region of the country.
According to the Federal Housing Finance Agency (FHFA), property prices have increased by at least 14.9 percent in every region of the country:
Increases have been seen in each of the country's top 20 metro areas.
Every major metro is witnessing at least a 13.3 percent increase in prices, according to the S&P Case-Shiller U.S. National Home Price Index (see graph below):
What Will Happen to Prices in 2022?
The equilibrium between supply and demand determines prices. Over the last 18 months, the demand for single-family houses has been high. The number of houses for sale was at or near historic lows. On the supply side, though, there is some positive news. According to Realtor.com:
“In August, 432,000 new listings were added to the national housing market, up 18,000 from the previous year.”
In 2022, however, there will still be a supply shortage relative to demand. According to CoreLogic,
“Given widespread demand and the quantity of single-family houses produced over the last decade, the single-family market is expected to be undersupplied by 4.35 million units by 2022,” according to the report.
However, most estimates predict that home price growth would slow in 2022. According to the Home Price Expectation Survey, which polled over 100 economists, financial strategists, and housing industry professionals, next year's appreciation will be 5.12%. The following are the projections for house appreciation in 2022 from the four other significant entities:
- 4.4 percent, according to the National Association of Realtors (NAR).
- 8.4 percent, according to the Mortgage Bankers Association (MBA).
- Fannie Mae owns 5.1 percent of the mortgage market.
- Freddie Mac has a 5.3 percent stake in the company.
In comparison to the record highs of 2021, price appreciation is likely to decrease in 2022. However, it is predicted to be higher than the average annual growth rate of 4.1 percent for the previous 25 years.
If you've owned a property in the last year, you've experienced a significant increase in your household wealth, which will continue in 2022. If you're considering buying, do so immediately because prices are expected to rise for at least another year.