What Recent Real Estate Market Statistics Mean for What to Expect in 2022

     In 2021, we've seen the prices of homes rise at substantial rates.  In Snohomish County, prices are up 22.8% from one year ago, and in King County, they rose by 12.25%.  Monthly rent prices for one-bedroom units have climbed to $1,726 on average (in Seattle) as well.  These less-than-ideal circumstances have many asking the million-dollar question, "Will the home prices improve if I just wait?"  Many have indeed decided to wait in hopes of better opportunities.

Will properties actually be more affordable in the future though?

     While home price increases over the last month have leveled off to less than 1% for both Snohomish and King counties, inventory remains very low, with there being a nationwide shortage of 4 million homes.  Homes are still selling fairly quickly at 7 days on average.  Inflation continues its historic rise, as The New York Times reports that inflation "is rising at the fastest clip in nearly 40 years." As we see extended effects of the pandemic-spurred financial relief from the government play out, the risk of continual historic inflation increases remains high.  

     The silver lining to the steep price increases of homes has been the record low interest rates.  Towards the end of the initial lockdown of the pandemic, interest rates were 2.7%, the lowest they had ever been.  They have already climbed back up to 3.1%. When inflation gets out of control, much like it is, the Federal Reserve typically raises interest rates to combat this, which is very much expected to happen in 2022. Just like our very own Ashton Fae and Scott Haggerty taught us, the lower the interest rates are, you obviously pay less on a monthly basis, and therefore, have more buying power.  

     Unfortunately for those holding out for lower home prices in 2022, Zillow predicts that home prices will once again significantly rise, expecting another steep uptick (14.3%) in value by the end of next year.  This prediction, as hard as it is to read for some, shouldn't come as a surprise when considering the influx in interest rates, as well as there being no solution in sight for the national home shortage.  

     While you can't go back in time and make purchases in the past when properties were more affordable, you can take advantage of the opportunity you have right now before price increases are so intense that you become completely priced out of the market, especially during the holiday slowdown with bidding wars being less intense.  Don't become one of the tragic casualties who let your money sit in your bank account having its value dwarfed by inflation, but instead invest in real estate while you still can, gaining the most amount of value for yourself long term.