So California Association of Realtors released it’s official Housing Market Forecast for 2022. I know if you’ve been thinking of selling you’ve probably wondered should I wait… Will prices go up… and if you’re planning to buy you’ve probably wondered the same exact thing, only for opposite reasons.
So while no one can make a 100% guaranteed forecast of the housing market, lot’s of experts will try and here’s what the California Association of Realtors thinks will happen as of October 2021.
CAR (that’s the California Association of Realtors) thinks a lot of what happens in the housing market is going to depend on how much we can get a control on this pandemic we’ve been living in since early 2020.
Mainly these three things are expected:
- Existing single family homes sales are forecasted to decline from 2021’s numbers by 5.2%
- The Median home price is expected to rise 5.2% in 2022. So if you’re thinking of selling, and CAR is right, you haven’t missed the peak yet. It’s just not expected to go up as much as it did in 2021 where we’re projected to see an over 20% increase in 2021! WHOA!
- Housing affordability is expected to drop to 23%, which isn’t great news. That means that just 23% of households can afford a median priced home. It’s the lowest we’ve seen science 2015
So let’s dive a little deeper into these predictions…
Lack of inventory is expected to continue to drive up home prices expected in 2022. Just not as huge of an increase as we saw in 2021.
That mass California exodus that’s always talked about in the media hasn’t yet impacted the California Real Estate Market. Sure, some people have moved out of California, but with such low inventory the past couple of years and even more people staying put…it appears to have had no impact at all on the California real estate market yet. Maybe it’s still on the horizon. Maybe sellers trying to time the market to sell exactly at the top. Or maybe some of us are just die hard Californian’s.
So what is going to keep California’s home prices from rising another 20% in 2022? Well, it’s not inventory. The lack of inventory is what will continue to drive up the prices of homes. But higher interested rates will help keep the prices down some. And as I’ve been saying for over a year now… Californians will move from more expensive areas to more affordable cities.
What we’re seeing happening with this is prices of homes and rents in more affordable areas have seen significant increases and rent prices in more expensive areas have decreased. It’s also impacted schools in more expensive areas as well as families are choosing to relocate to other counties schools in more expensive areas are seeing a significant decrease in student enrollment.
Interest rates are expected to increase slightly, but still remain low at 3.5% or less. Still historically low rates.
With buying a home you get security of knowing your monthly housing costs aren’t going to suddenly and drastically increase. I strongly believe that owning the home you live in is the first step to financial security and owning a cash flowing rental property is truly life changing.