Housing Trends in January – What Does The Market for 2022 Look Like?

Dated: January 6 2022

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Mortgage rates & inventory still at record lows

The change in season typically brings on a significant slowdown in the housing market, but as we know, the last couple of years have been anything other than “typical.” Mortgage rates and home inventory remain historically low, and the demand continues to remain high. This fact further encourages the idea that we are headed into 2022 still in a seller’s market. However, it shouldn’t be quite as intense as we’ve seen it in 2021.

It was hinted by the Federal Reserve that interest rates should rise in 2022, which could potentially slow down the buyer frenzy we’ve been experiencing in the last year.


Mortgage rate predictions for 2022

Most experts agree that rates will increase in 2022, but by how much? It is impossible to predict exact trends, but on average, industry professionals assume that the rates for 30-year fixed mortgages could rise to 3.88% and 15-year fixed to 3.27% by the end of 2022 (based on information via themortgagereports.com). For reference, current rates in Minnesota are 3.21% for a 30-year fixed, and 2.51% for 15-year fixed.

However, with recent COVID variants emerging coupled with economic instability, rates have fallen slightly. Experts still expect these rates to increase due largely to inflation, but with the pandemic still shaking things up, some volatility will remain.


Is now a good time to buy a home?

The short answer is yes, given that rates are still favorable. Trying to time the market will often lead to disappointment. While rates aren’t as low as they were in 2020 and early 2021, they are still considered historically low. Waiting around to see what happens with these rates is not a great strategy, as they will most certainly fluctuate. Instead, make a budget, lock in your rate, and find your dream home before the mad dash of springtime buyers!

The other side of this coin is that house prices are increasing, and inventory is expected to remain low in the beginning of the new year. This will contribute to some of the competitiveness in the market that we’ve seen, although likely not to the degree that it was during the spring and summer markets.


Should I sell now or wait until Spring?

Many sellers opt to put their homes on the market in the Spring in attempt to garner the largest number of potential buyers. This is especially prevalent in the Twin Cities, where winter is a less than desirable time to move. However, listing a home in a low-inventory market can be a lucrative move for sellers.

During the wintertime, buyers tend to be more qualified and motivated in their home search. And with fewer options on the market, you are more likely to get an offer on your home. As a bonus, your realtor may have fewer clients during this time, and will therefore able to spend more time devoted to helping you sell!


Overall Outlook for January

Taking all factors into account, the upcoming winter housing market shows signs of a cooldown with rising mortgage rates, but even so, this probably won’t cause any major dip in activity. We are still very much in a seller’s market, but buyers shouldn’t shy away from searching to find their dream home in January!

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