2022 real estate forecast of housing market in Texas

According to Realtor.com’s2022 Housing Forecast, first-time buyer demand will outmatch the inventory recovery of the national real estate market as Americans will have a better chance to find a home but will face a competitive seller’s market.

The year will also present a mix of housing affordability challenges and opportunities as listing prices, rents and mortgage rates are all expected to rise, according to the site.

Realtor.com projects 2022 home sales will hit their highest level in 16 years, rising 6.6 percent year-over-year. Buyers are expected to remain active and for-sale inventory is forecast to begin recovery from recent steep declines. Realtor projects record-high listing prices, fast-paced sales and limited for-sale home options as existing home listings remain behind pre-COVID levels. The new construction supply gap of 5.2 million new homes may also shrink as builders continue to ramp up production, projected to increase 5 percent year-over-year.

“Whether the pandemic delayed plans or created new opportunities to make a move, Americans are poised for a whirlwind year of home buying in 2022. With more sellers expected to enter the market as buyer competition remains fierce, we anticipate strong home sales growth at a more sustainable pace than in 2021,” Realtor.com Chief Economist Danielle Hale said in a statement.

“Affordability will increasingly be a challenge as interest rates and prices rise, but remote work may expand search areas and enable younger buyers to find their first homes sooner than they might have otherwise,” Hale continued. “And with more than 45 million millennials within the prime first-time buying ages of 26-35 heading into 2022, we expect the market to remain competitive.”

There is expected to be a 4.7 percent bump in sales in the Austin Metro real estate market, with prices expected to increase 3%. Dallas-Fort Worth is expected to see an 8.3 percent rise in sales with prices rising 4 percent , El Paso is set to rise 10.6 percent in sales with prices increasing 5.1 percent and the Houston Metro area is forecasted to rise 2.6 percent in sales and 2.4 percent in prices. McAllen-Mission is set to rise 5.9 percent in sales and 5.1 percent in prices and San Antonio should see a 5.1 percent rise in sales and 3.5 percent in prices.

Prospective sellers are increasingly planning to enter the market this winter, according to Realtor.com, although affordability will be a growing consideration as mortgage rates and home prices rise. A growing economy, strong employment market and workplace flexibility are expected to enable first-time buyers to purchase homes without breaking the budget.

Homebuying may also become the more affordable option, Realtor.com said, with rents forecasted to outpace for-sale home prices in 2022. Rents are forecasted to grow 7.1 percent and home prices 2.9 percent year-over-year. The homeownership rate is expected to grow slightly in 2022 to 65.8 percent.

Recent survey data shows that millennials account for over half (53 percent) of prospective buyers who plan to purchase their first home within the next year, according to Realtor. This first-time buyer demand is expected to outmatch both new and existing home inventory. Home shoppers will face fierce competition for the next three years, Realtor projects, as millennials look for first homes, Gen Z increasingly enters the housing market and more older Americans look to downsize.

Recent survey data also shows that 19 percent of prospective sellers are looking to move because they no longer need to live near the office, up from just 6% in the spring, according to Realtor.com.

Realtor.com projects that suburbs will continue to be more popular than big urban metros as home shoppers search for relatively affordable and larger homes. The typical 2,000-square-foot single-family home price rose at a double-digit annual pace in October (16.7%), meaning buyers may have to sacrifice extra space to afford a home in their desired area.

“Our Housing Forecast suggests that we’re in store for another dynamic year of activity, but 2022 will also come with growing pains as we navigate the path forward from the height of the pandemic toward a new normal,” George Ratiu, manager of economic research for Realtor.com, said in a statement. “With most real estate markets expected to be competitive in 2022, it’s important to remember that you’re in the driver’s seat of your real estate journey.

“The bottom line for buyers is to make sure you’re comfortable with your timeline and budget – and especially for younger buyers making this massive financial decision for the first time,” Ratiu continued. “For sellers, take into account your local market conditions as well as the likely increase in the number of homes for sale, and price yours competitively.”