The general outlook for 2022 is the nation's housing market will remain robust and competition fierce. Realtor.com forecasts despite the challenging market, the homeownership rate will grow slightly by year-end to 65.8 percent.
The real estate website's 2022 Housing Forecast indicates this year will present a mixed bag of housing affordability challenges and opportunities. Listing prices, rents and mortgage rates are all expected to climb while incomes rise. Millennials will dominate first-time homebuying competition and homeowner diversity will play an increasingly significant role in the market.
"Whether the pandemic delayed plans or created new opportunities to make a move, Americans are poised for a whirlwind year of home buying in 2022." says Realtor.com Chief Economist Danielle Hale. "Affordability will increasingly be a challenge as interest rates and prices rise, but remote work may expand search areas and enable younger buyers to find their first homes sooner than they might have otherwise."
The Realtor.com report forecasts 2022 home sales will increase 6.6 percent year-over-year and hit their highest level in 16 years as buyers remain active and for-sale inventory begins to recover from recent steep declines. Builders will continue to ramp up production with a projected increase of 5 percent year-over-year.
While mortgage rates and home prices will rise, a growing economy, strong employment market and workplace flexibility will enable more home shoppers to successfully buy their first homes without breaking their budgets. With rising rents, homebuying may become the more affordable option in many markets.
Millennials are expected to fuel first-time buying competition through 2025. The report indicates recent survey data shows millennials account for over half (53%) of prospective buyers who plan to purchase their first home this year. More than 45 million millennials are within the prime first-time buying ages of 26-35, so expectations are the housing market will remain super competitive.
Additionally, younger diverse populations are also expected to play a significant role in the 2022 housing market. The number of Hispanic home shoppers is rising at a faster pace than non-Hispanics and expected to impact the homeownership rate in 2022 and beyond.
"In Silicon Valley, where home prices are among the highest in the nation, our members are optimistic that the market will continue to see steady price growth," says Brett Caviness, 2022 president of the Silicon Valley Association of Realtors. "We're seeing a continuation of consistent multiple offers on many properties coming from a large pool of buyers. And with down payment amounts often ranging from 20 to 50 percent or more, it's apparent today's buyers have the funds necessary to access homes at Silicon Valley real estate prices."
Caviness adds, "Those who are employed in the tech sector, many of whom are millennials, have been able to capitalize on higher incomes and stock options. There is data that indicates California is top among 10 states forecast to have the highest percentage of millennial millionaires - 44 percent in the country, and of the 10 zip codes with the highest concentration of this group, five are in Santa Clara County."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.