The last two years have been unprecedented for many markets—maybe no more so than housing. And while this is the time of year when analysts pull out their proverbial crystal balls to try and predict what lies ahead for the upcoming 12 months, the general sentiment appears to be expect the unexpected.
Redfin has come out with its market predictions for the new year—some more bold than others.
According to Redfin analysts, in 2022, new listings will surpass the 2018 high of 7.6 million homes. Home-sale contingencies (allowing a homeowner to make an offer to buy a new home on the condition that their existing home sells first) will become more common with the expectation that new listings will set a new record.
“Builders have been doing everything they can to get more homes built to match today’s demand,” said Ali Wolf, Chief Economist at homebuilding research company Zonda. “Still, builders face a lot of roadblocks, which will keep supply from reaching its full potential next year. Labor shortages, lot delays and supply chain challenges are all making it harder and more expensive to build new homes. New home inventory should increase from 2021’s bottom, but we anticipate the market will remain undersupplied. Entry-level home supply in particular will remain extremely constrained. I can’t imagine we get to a point where we are flush with entry-level homes.”
One area would-be buyers may turn to is the condo market. Redfin predicts that as more and more homebuyers are open to buying a condo or townhome for a fraction of the price of a single-family home, the pandemic peak of single-family housing may be coming to an end.
As homebuyers sought out larger homes with big backyards, single-family home prices increased some 27 percent from the start of the pandemic, while condo home prices only increased by 14 percent.
With the expected end of double-digit price growth in the horizon, more homeowners are expected to cash-out and list. And the rental mark could win big.
According to Redfin, rents will increase 7 percent by the end of 2022, more than double the predicted year-over-year growth in home prices of 3 percent, as some return to dense urban areas (i.e. renter friendly) and others relocate and test the neighborhood waters before committing to a purchase.