After hitting an all-time low of 2.65% in January of 2021, mortgage rates have been on the rise. At the end of 2021, the average 30-year fixed-rate mortgage stood at 3.05%, based on data from Freddie Mac.
In 2021, an unprecedented surge in buyer demand resulted partly from a lack of inventory, work-from-home trends, and supply chain constraints limiting new construction. But Fairweather sees a shift toward a less frothy market.
3. Home Value Appreciation Will Slow from Record Pace
Economists generally agree that the blistering pace of home price appreciation will slow significantly in 2022. Notably, most economists do not foresee a drop in prices, only a slowing of the current trends.
In 2021, building supply and labor shortages contributed to home-builders’ inability to keep up with demand for new construction. Mike Fratantoni, the chief economist at the Mortgage Bankers Association, sees the supply shortage starting to ease in 2022, leading to additional inventory hitting the market.
According to Danielle Hale, chief economist at Realtor.com, as home prices and rents rose in 2021, real estate investors continued to be net buyers of single-family homes. “In 2022, investors will continue to see solid returns from their investments in the housing market,” she noted in her 2022 National Housing Forecast.