2 Factors That May Impact the Real Estate Market in 2022

2021 has been a hot year for the real estate market. Houses are selling at record prices, bidding wars are frequently taking place for the limited inventory available, and it’s not unusual for buyers to pay for home purchases entirely in cash.

The market appears to be normalizing somewhat as more listings become available, 2022 is poised to have some unique issues and challenges of its own when it comes to real estate sales.

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Two factors that are likely to impact the market in 2022

1. The Federal Reserve’s decision in November to scale back its pandemic-era economic stimulus efforts.

2. Foreign investment returning to the U.S. real estate market as American borders open.


Feds announce an end to pandemic-era stimulus measures

In early November, the Federal Reserve announced plans to taper off its $120 billion bond-buying program and begin winding down its historic effort to stabilize the U.S. economy amid the rollercoaster ride of COVID-19.

The decision comes in response to the significant economic rebound the country has experienced in recent months. As federal stimulus measures end, the central bank will be reducing bond purchases by $15 billion each month through January.

The Federal Reserve’s decision to scale back asset purchases represents an attempt to normalize monetary policy, which shifted into crisis mode as the pandemic tightened its grip on the U.S. economy

Heading into 2022, it’s likely mortgage rates will increase anywhere from 0.25 to 0.5 percent, which could make a big difference for some potential homebuyers. Therefore, it is always best to buy now, instead of six months from now!

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Foreign investment returns in 2022

Nation’s borders were largely closed during much of the pandemic, the housing market was essentially protected from an even bigger run-up in purchase prices that might have been driven by foreign investors dabbling in the market. This reality is poised to shift quickly in the opposite direction as American borders reopen. Foreign investors have been waiting for almost two years to get back into the U.S. markets and there will be an acceleration of money from abroad flowing into U.S real estate.

If you’re a seller, this run-up may be ideal if you are looking to sell and move! Still, not all real estate experts are convinced there are such significant changes ahead, at least not with regard to foreign investors flooding the market come 2022

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