From listening to Windermere Chief Economist, Matthew Gardner, here are his top 10 predictions for this new year.
#1. Price will continue to rise
In 2021, Seattle’s appreciation was 16% and the pace will slow down to 6% due to affordability issues. We are testing affordability levels across the country even in unexpected areas such as Salem, Eugene, Boise, Bellingham and Tacoma.
#2. Spring will be busier than expected
The season may come earlier & be bigger. The work paradigm is real and is likely to increase. The rise of COVID variants forced companies to delay “going back to work” to this year. Workers are likely to find out how many times they will have to go to work per week and find homes better equipped for home offices.
#3. The rise of the suburbs
This is a follow up from the previous point. Work will still be conducted from home either partially or full time leading to the appeal of suburbs and or areas away from high density. Greater interest in secondary and tertiary markets which have previously been overlooked up to now. This will lead affordability issues for existing residents who were planning to buy when the time was right.
#4. New construction jumps
The cost of new construction is expected to go down a bit due to inflation. Material costs, which spiked with COVID, should go down and lead to increasing new construction starts close to numbers not seen since 2005: 1.2M to 1.3M.
#5. Zoning issues will be addressed
A big push is expected to address zoning issues limiting development. Significant changes should be a focal point this year.
#6. Climate change will impact where buyers live
Now that natural disasters are increasing in frequency and climate risk data is starting to be readily available, buyers will want to know about fire or flood risks and the associated costs on home insurance or mortgage rate.
#7. Urban markets will bounce back
While increased working-from-home can & will raise housing demand further away from city centers, it may not necessarily mean less demand for city living. In fact, some urban neighborhoods may even become highly desirable.
#8. A resurgence in foreign investors
Prospective buyers have been sitting on the sideline since the beginning of the pandemic and started to look again when the travel ban was lifted last November. All this has been put on pause again due the rise of the latest COVID variant. If borders do not close again, we are expected to see a resurgence in foreign investors.
#9. First-time buyers will be an even bigger factor
First-time home buyers will be an even bigger factor in 2022. 4.8M millennials will be turning 30 which is the median age for Americans to purchase their first home. An additional 9.4M will be celebrating their 28th and 29th, people who are likely to buy a home if they can buy further out at more affordable prices.
#10. Forbearance will come to an end
Forbearance will come to an end, and it will be okay. There used to be a thought that this would mean a wave of foreclosures which is not the case. The number is shrinking. Homeowners still have the opportunity to sell their homes if they cannot get back on their feet as they exit the program.