Real Estate Market: 2022 Trends and 2023 Projections

2022 Housing Market Trends

• Housing market prices have increased over the past decade by 90.0%. The fastest rate of appreciation took place during the pandemic. Housing market prices have increased by 41.3% over the past three years. In 12 months, market prices have increased 13.5%. We will continue to see prices increase, as interest rates will weigh on mortgage applications. Prices will be higher, but may increase at a slower rate than the market has seen.

• Mortgage rates are seemingly increasing. The average commitment rate on a 30-year fixed-rate have more than doubled in 2022. Rates have rapidly increased to fight inflation and lower demand. Data shows peak inflation is near, which softens interest rates, though there is still a chance of higher increases. Inventory levels have shown a slight decrease due to increases in mortgage rates and the threat of a recession.

Though rent prices in the U.S. housing market declined in November, rental increases over the year were higher than the pre-pandemic levels. The median rent price for one or two bedroom units is around $1,356.

• Foreclosure rates have regressed to pre-pandemic levels. It has significantly slowed down over the past decade, but foreclosures are increasing. In October, there were a total of 23,376 U.S. properties that entered the foreclosure process.

• The median home prices in 2022 have increased across the United States, as well as the cost of homeownership. Over the past three years, we’ve seen a drastic rise in home value, specifically due to the pandemic. Over the last year, the median home value increased 16.5%.

Top U.S. Real Estate Markets In 2022

• Austin, TX

• Raleigh, NC

• Charlotte, NC

• Phoenix, AZ

• Nashville, TN

U.S. Housing Market 2023 Projections

• Housing market prices will continue to increase, as we are seeing a consistent rise in home value. The median home value has consistently risen for the past ten years, and projects to increase in 2023.

• Inventory shortages will slightly subside. Currently, the U.S. housing market is below “healthy” levels of homes for sale. This is largely due to the rising mortgage rates, and fewer homes are going up for sale.

We can expect to see millennials buying the most homes. Millennials are the largest home buyers, and will continue in 2023. Younger millennials are expected to start representing a large share of buyers, as they are seeking starter homes.

• Interest rates will continue to increase. Until inflation is no longer on the horizon, commitment rates on the 30-year fixed-rate mortgage will likely still rise.

• We will see secondary cities move into the larger market. The resulting pandemic work-from-home environment is enabling more people to leave the large, expensive cities, and into more local cities.

The U.S. housing market has been impacted variously by the pandemic. Inflation is on the horizon, and interest rates have rapidly increased. Higher mortgage rates are causing a decline in the housing market, and prices are expected to continue increasing.

Source: U.S. Real Estate Market 2022: Prices, Trends & Forecasts