As supply declines in the housing market, it is expected that property prices will increase resulting in the slow down of sales in 2022. Transactions will still be at the second highest level in the past five years.
The 2022 California median home price is forecast to increase by 5.2 percent to $834,400, compared to the 2021 median home price of $793,100. Home sales are expected to decline to 416,800 units from the 2021 sales figure of 439,800.
Low supply will put upward pressure on prices, but higher interest rates will likely suppress median price growth. Demand for housing in more affordable areas will increase as remote working continues to popularize, preventing the California median home price from rising too quickly.
“A slight decline next year from the torrid sales pace of the past year-and-a-half will be a welcome relief to potential homebuyers who have been pushed out of the market due to high market competition and an extremely low level of homes available for sale,” said C.A.R. President Dave Walsh. “Motivated buyers will have more inventory to choose from. They will also benefit from a favorable lending environment, with the average 30-year fixed rate mortgage remaining below 3.5 percent for most of next year.”
What Experts are Saying
“Home sales will notch lower by 2% in 2022, principally because of higher mortgage rates. Home sales will not crash thanks to job gains, investor demand and the work-from-home reshuffle in residential location choice.”
– Lawrence Yun, Chief Economist, N.A.R.
“Demand will continue to be driven by low mortgage rates and demographics. Consider that the largest cohort of millennials is approaching prime age for first–time homeownership”
– Rick Sharga, Executive VP, RealtyTrac
“Positive indicators are hinting to a more favorable housing market in 2022. The heated pace of sales is beginning to show signs of moderation, and this is helping to increase the number of homes for purchase. This suggests that the balance between sellers and buyers will shift toward a more normalized market next year.”
– Paul Buege, President/COO, Inlanta Mortgage