Market Report: Real Estate Experts Make Their 2022 Predictions
In this month’s market report, we share expert predictions about the 2022 housing market. Will buyers finally catch a break? Will interest rates rise? We also show you Moraga’s most expensive house listed in January, tell you why an Abio agent and his alpacas made international news, and share East Bay sales stats from December.
Wowza, what a frenetic year 2021 was for the U.S. housing market. Will we get to catch our breath in 2022?
Last year, national home sales were on track to reach the highest level in 15 years, up 7.1% from the previous year and far surpassing earlier growth projections. Homes sold faster and for more, especially here in the hyper Bay Area market. Sellers kept winning while would-be buyers kept losing to multiple-bid competitions, all-cash offers, and climbing prices.
So, what’s in store for buyers and sellers in 2022?
Well, we’re not expecting a significant slowdown or wild market swings. But there are some possible changes and opportunities you should get ready for…
Top 5 Predictions for the 2022 Residential Real Estate Market
1. Low housing inventory means 2022 will be a seller’s market.
As long as home buyers keep outnumbering sellers, the sellers will have the upper hand in 2022.
The housing inventory shortage is a national challenge, with the number of homes for sale continually shrinking. In December, active listings declined by nearly 27% over the previous year, according to Realtor.com.
Locally, the Bay Area’s chronically low inventory is expected to perpetuate our competitive environment for buyers in 2022.
Why is inventory low? New home construction is hampered by rising building material prices and a labor shortage.
Also, that big Baby Boomer demographic isn’t downsizing and selling like we thought it would.
“While Baby Boomers preferred to downsize prior to the pandemic, it appears that they are staying put for now… and potentially hosted their children and family.”
Selma Hepp, deputy chief economist, CoreLogic
A contrary forecast, however, says more inventory will hit the market later in 2022 thanks, in part, to new construction and the end of the Covid-19 forbearance allowances for financially-strapped mortgage payers. Without aid to stay afloat, these struggling homeowners might need to sell or go into foreclosure.
“We also expect a growing number of homeowners to bring properties to market, taking some pressure off high prices and offering buyers more options.”
George Ratiu, manager of economic research, Realtor.com
2. Home prices will rise but at a slower pace in 2022.
Sales prices for single family-homes trampolined up, up, up in 2021. In the greater Bay Area, the median hit $1.3 million in November, a nearly 18.2% increase over the previous November, according to the California Association of Realtors.
Abio Properties agent Andrea Schlosser (pictured) predicts we’re probably done with jaw-dropping price hikes.
How much exactly? Nationally, Realtor.com’s chief economist Danielle Hale told Forbes that home prices are projected to rise nearly 2.9%.
“2022 will continue to see prices increase but at a slower pace than 2021, mainly due to the rising interest rates affecting buyer purchasing power. Perhaps those increases will be in the single digits.”
Andrea Schlosser, Real Estate Agent, Abio Properties
3. There will be a rush to buy before interest rates climb in 2022.
Andrea also expects that the threat of higher interest rates will cause more buyers than ever to jump into the market.
“There is very little inventory all over the Bay at the moment, and that combined with the impending interest rate hikes will bring all the buyers of single-family homes and condos to act quickly especially in the first quarter as they try to lock in lower rates,” she predicts.
While 2021 began with record low interest rates – 2.65% for a 30-year fixed-rate mortgage – they could increase to 3.7% by the end of 2022, N.A.R. economist Yun recently told CNN. (That’s still below the pre-pandemic rate of about 4%.)
4. More millennials and more moving in 2022.
Guess who’s joining the party? More than 45 million millennials, ages 26-35, are hitting prime age to buy their first homes.
That means even more buyers will be competing for entry-level homes in 2022.
However, they all won’t stick it out in our pricey Bay Area market. Forecasters expect this pandemic-era, work-from-home generation is more likely to move to more affordable cities and states.
“Remote work may expand search areas and enable younger buyers to find their first homes sooner than they might have otherwise.”
– Danielle Hale, chief economist, Realtor.com
5. Are you selling a home with a pool or guest house? You’ll score in 2022.
Home buyers will want more space and amenities in 2022, predicts Linnette Edwards, Abio’s co-founder and associate broker.
The most in-demand attributes, as Linnette (pictured) recently explained to the San Francisco Business Times, are:
- Four or more bedrooms (Pandemic-era families crave lots of space for things like a home office and exercise room.)
- Yards with gardens
- Staycation homes (Tahoe, wine country, the coast)
- Accessory dwelling units (for home offices and guests)
- Energy-saving features
The bottom line is we expect these small, not sweeping, changes in residential real estate in 2022. If you’re unsure what to do this year – rush or wait to buy or sell a home – reach out. We’d love to walk you through the current market conditions in your neighborhood.
Moraga’s Most Expensive Home on the Market in January
It sits on 8.5 acres, where the 4,806 sq. ft. main house features four bedrooms, a large loft, 3.5 bathrooms, vaulted wood-beamed ceilings, LOTS of windows, and a finished basement with high ceilings.
There’s also a pool, two-bedroom guest house, and detached garage/workshop.
Abio Agent’s Roaming (and randy?) Alpacas Make International News
Real estate agent Tobias Riday of Abio Properties was vaulted into the spotlight when his two Huacaya alpacas, father-son duo Boogie and Woogie, escaped from his Oakland Hills property.
Tobias (pictured) and his family went for a hike the day before and accidentally left a gate unlocked. Alpaca escapades ensued.
“They were cruising the park, and then they just jetted into the city streets,” Tobias told the L.A. Times, one of the many publications covering the incident. “That’s when the chaos ensued. Because they’re really comfortable in our yard and in the park, but they’re not familiar with the streets.”
His family searched the neighborhood, but the alpacas apparently headed toward I-580, went under an overpass, and ended up being corralled by a resident on her driveway. The found alpacas were posted on Nextdoor, which is how Tobias was finally reunited with them later that day.
Why did Boogie and Woogie venture away from their little urban farmstead? They had plenty to eat (they grazed on wild grasses and thereby helped with wildfire prevention). And they had pleasant company (the Riday family and Buddy the duck).
Tobias wonders if the elder Boogie was looking for love. And now perhaps the wooly bachelor’s sudden fame will help him find a mate.
“He’s a single father, likes long walks in the pasture, and never looks at his phone,” Tobias told SFGate.
December Home Sales in YOUR City
The following is the most recent sales data available for detached single-family homes. Sources: Bay East Assoc. of Realtors and Contra Costa Assoc. of Realtors.
Want real estate market data for a city not listed here? Get in touch, and we’ll dig up those numbers for you. 888-400-ABIO (2246) or email@example.com.