The New Year will bring more balance to the housing market, according to a new report from Redfin. However, the broker warned consumers not to expect a buyer’s market—just more selection, less frenzy and slower price growth.
Redfin Chief Economist Daryl Fairweather predicts there will be a rush to buy homes at the start of the year before mortgage rates rise. That early onslaught of demand will deplete the supply of homes for sale.
In the second half of the year, a much needed increase in new construction will boost sales slightly. In 2022, there will be 1% more sales than in 2021, and by the end of the year, home price growth will slow to 3%.
Among Fairweather’s predictions for the coming year is that new listings will hit a 10-year high, which will hardly make a dent in the ongoing supply shortage, and more homebuyers will move to northern cities where home prices are lower.
In 2022, Fairweather says new listings will surpass the 2018 high of 7.6 million homes, setting a new record going back to at least 2012. As the market becomes more balanced, homeowners will find it less daunting to list their home while looking for a new one to buy.
Home-sale contingencies, which allow a homeowner to make an offer to buy a new home on the condition that their existing home sells first, will become more common.
In 2022, the economist says people will be less likely to move to Sun Belt cities that dominated the 2021 housing market. Austin, Atlanta and Phoenix have seen home prices increase by 29%, 24% and 35% respectively since the start of the pandemic, making them less attractive to homebuyers that prioritize affordability.
Instead, cost-conscious homebuyers will seek out affordable northern cities like Columbus, OH, Harrisburg, PA and Indianapolis, which all happen to be capital cities with highly educated residents where the median home price is still less than $250,000.