How 2022 Is Looking To Be A Much Better Market For Buyers

If you held off on buying a house in 2021 because of unprecedented sellers’ market conditions, you’re not alone. For the past 12 to 18 months, finding homes for sale in Kansas City has been easier said than done. In fact, across the U.S., buyers have struggled with rising values, low inventory levels, and cutthroat bidding wars.

Fortunately for buyers, it appears things could be shifting in 2022. According to several recent real estate reports and analyses, several signs point toward cooling market conditions in the year ahead. That’s not to say the market will flounder; instead, it may become easier for buyers to manage.

Here are three examples suggesting that the real estate market should be better for buyers in 2022:

1. Home Appreciation Rates Are Finally Coming Back to Earth

Since the onset of the pandemic, home values have increased steadily across the U.S. In fact, in many markets, they haven’t just increased – they’ve positively skyrocketed. For example, in white-hot markets like Boise and Austin, home values rose by 30% over the past year.

As nice as these appreciation rates have been for homeowners and sellers, they’re not sustainable. There have already been signs of slowing appreciation rates in many parts of the country. In other areas, home values even appear to be leveling off. Much of this is attributable to softening demand by buyers who are scared away by sky-high prices.

Authoritative sources like Freddie Mac are predicting slower appreciation rates in 2022. The firm states that 2021’s average rate of 12.1% appreciation should level off to a more reasonable 5.3% next year.

2. Inventory Levels Are Improving

For some time, inventory levels across the U.S. were at or near record lows. Over the last few weeks, however, more properties have been hitting the market. A new real estate report covering the country and its 50 top real estate markets states that listings rose by 5% in August 2021 versus the same period in 2020 and even rose by as much as 20% in places like Columbus and Cleveland.

Sellers’ markets thrive on low supply and strong demand. If supply increases, we should see a more balanced real estate market developing in 2022.

3. The Real Estate Market Appears to Be Cooling Down

Finally, the fever pitch of the real estate market over the last 12 to 18 months appears to be waning a little. Demand still outstrips supply, but several reports indicate that things are starting to cool down. For example, Redfin reported a 6% drop in sales in August 2021 versus August 2020. The National Association of Realtors also reported a “measurable decline” in pending home sales over the past summer. A slowdown in sales could precipitate a slowdown in rising home values, producing better market conditions for buyers.

Without question, skyrocketing home values play a role in cooling market conditions, as many would-be buyers have been priced entirely out of the market. Look for that to change and for things to reach a more even keel in 2022.