Last year’s housing market broke eleven major industry records, including lowest mortgage rates, lowest inventory, highest home prices, fastest sales, and more. Basement floor interest rates brought out the buyers in droves, and many sellers found themselves accepting offers thousands over listing price. As we move into the hot season for 2022, many people are wondering if we can expect the same sort of frenzy again.
The 2022 housing market is expected to stay hot, with high prices and competitive sales. Read on to learn what to expect in the northern VA housing market in the coming year.
Prices Will Continue to Rise
Since the beginning of the pandemic, housing prices have shot through the roof. Several factors account for this; for one thing, historically low-interest rates have increased demand. Rising lumber prices, supply shortages, and labor shortages have also slowed down the rate at which new houses are being built, drastically reducing market inventory.
Although this shortage is starting to ease up some (more on that later), experts predict housing prices will continue to rise. As we’ll discuss more in a moment, an increased demand in northern Virginia will keep listing prices high. Expect to pay a premium price if you plan to buy a house this year.
Interest Rates Will Go Up
Another factor contributing to increasing house prices is rising interest rates. In an effort to keep the economy stimulated, during the pandemic, banks dropped interest rates to just 3 percent. This was an opportunity many investors and first-time homebuyers couldn’t pass up, and so we saw the market boom of 2021.
In 2022, as the pandemic draws to a close, interest rates are returning to more normal levels. As of this writing, they’re sitting just under 5 percent for a thirty-year loan and just under 4 percent for a fifteen-year loan. This means that, overall, people will be able to get less house for their money.
Housing Demand Will Continue to Grow
In spite of rising house prices, real estate demand is expected to continue to grow as we move into 2022. In northern Virginia in particular, the new Amazon campus is bringing more jobs into the area. There are also more high-wage-sector jobs open than ever before, creating new opportunities for young professionals looking for a solid paycheck.
With so many high-paying jobs up for grabs, first-time homebuyers can be more confident in making a major purchase like a mortgage. Some others are looking to get out of the rental market and start investing in the real estate market. Given how well the industry weathered the pandemic, many people look at it as a safe way to build their wealth in uncertain times.
Competition Will Remain Stiff
Given all this demand, it may come as no surprise that competition for homes will remain stiff. In 2021, we saw homes selling in a matter of hours, not days, and bidding wars driving sale prices sky-high. Buyers who wanted to get hands on their dream home had to act fast before someone else got an accepted offer.
This year, buyers are going to have to be on top of their game if they want to snag the home of their dreams. Mortgage pre-qualifications are going to be more important than ever, and buyers will need to be prepared to act fast when a promising home comes on the market. Many buyers are opting to get pre-inspections in order to help them move the closing process along even faster.
Supply Will Ease Up
Although demand is going to remain high and homes are going to move fast, experts say that the inventory shortage is likely to ease up in 2022. The supply chain is beginning to recover a bit, and construction companies can return to somewhat normal operations. New houses will start coming on the market again, and we’ll see that supply pool return to more normal levels.
Many current homeowners may also elect to put their homes on the market this year, adding to the inventory pool. Homeowners who have been contemplating a move may want to take advantage of the current market highs before it drops back off again. Others may be looking for their own opportunities to upgrade (or downsize) before interest prices rise any more.
Demand Will Shift to Urban Centers
While the housing market demand is likely to stay high all over northern Virginia, we’re likely to see the demand shift more toward urban centers. Today’s homebuyers want to be close to their jobs so their commutes don’t take as much of their days. They also enjoy the amenities cities offer, such as restaurants, gyms, and museums.
As we come out of the pandemic, more first-time buyers are going to want to take advantage of these burgeoning social scenes. Many jobs are also moving employees back to the office, pulling people back to cities. Competition for urban dwellings will be especially intense in the coming year.
Explore the Northern VA Housing Market
The 2021 housing market was unlike any we’ve seen in recent history, and 2022 is likely to break the mold again. Although interest rates and house prices will continue to go up, we’ll see competition for houses remain stiff. The supply pool will recover some, and urban housing will become especially hot as people move back to the cities.
If you’d like to explore the northern VA housing market for yourself, check out the rest of our site at Nomadic Real Estate. We provide leasing, management, sales, and, most importantly, peace of mind. Learn more about our real estate sales services today and start getting the expertise you need.