Home Price Appreciation has Skyrocketed in 2021… What Do Experts Predict in 2022?

One of the major story lines in 2021 has been how well the real estate market is performing. One key metric to track the performance is appreciation. According to the latest reports and indexes, home prices are skyrocketing.

The latest percentages showing the year-over-year increases in home price appreciation:

  • The House Price Index (HPI) from the Federal Housing Finance Agency (FHFA): 18.8%
  • The S. National Home Price Index from S&P Case-Shiller: 18.6%
  • The Home Price Insights Reports from CoreLogic: 18%

The dramatic increases are seen at every price point in all regions of the country. According to the latest Home Price Index from CoreLogic, each price range is seeing at least a 19% increase year-over-year. Every region in the country is experiencing at least a 14.9% increase in home price appreciation according to the Federal Housing Finance Agency. According to the US National Home Price Index from S&P Case-Shiller, every major metro is seeing at least a 13.3% growth in prices.

So what about price appreciation in 2022? Prices are the result of the balance (or imbalance) of supply and demand. The demand for single family homes has been strong over the last 18 months. The supply of houses available for sale was near historic lows. However, there is good news on the supply side. Realtor.com reports, “432,000 new listings hit the national housing market in August, an increase of 18,000 over last year.” Though there will still be a shortage of supply compared to demand in 2022. “Given the widespread demand and considering the number of standalone homes built in the past decade, the single family market is estimated to be under supplied by 4.35 million units in 2022.”

Yet, most forecasts call for home price appreciation to moderate a bit in 2022. The Home Price Expectation Survey, a survey of over 100 economists, investment strategists, and housing market analysts call for 5.12% appreciation next year. The four other major entities forecast the appreciation as follows:

  • The National Association of Realtors (NAR) 4.4%
  • The Mortgage Bankers Association (MBA): 8.4%
  • Fannie Mae: 5.1%
  • Freddie Mac: 5.3%

Price appreciation is expected to slow in 2022 when compared to the record highs of 2021, however it is still expected to be greater than the annual average of 4.1% over the last 25 years.

The bottom line is that if you’ve owned a home over the past year, you have seen your household wealth grow substantially, and you’ll see another nice boost in 2022. If you are thinking about buying or selling please be in touch. If buying is on your list, the sooner the better as prices are expected to continue to go up.

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