The year 2021 took homebuyers on a wild ride.

Home prices soared some 20 percent year over year, the single largest jump ever recorded in the history of the Federal Housing Finance Agency. Despite those accelerated prices, homebuyers nevertheless scooped up an estimated 6 million homes in 2021, the highest figure in 15 years.

Homes, meanwhile, sold at a record pace. As the availability of existing properties plummeted from 2020, bidding wars, all-cash offers, and no contingency deals became commonplace in 2021.

On the plus side for buyers, mortgage rates remained at historically low levels, a positive reality that aided buying power and helped facilitate home ownership for many.

Compared to 2021’s adventurous turns, industry insiders expect a more subdued 2022, though many acknowledge that the past year’s shadow will continue to loom in significant ways.

Here are three things you can expect from the real estate market in 2022 and the potential impact it could have on your housing plans:

#1: Mortgage Rates Will Climb.

At the start of 2021, the average rate on a 30-year mortgage sat at a ridiculously low 2.93 percent, according to Bankrate’s national survey of lenders. While rates escalated throughout 2021, the year ended at a still favorable 3.27 percent average. Many observers say the record-low rates fueled last year’s homebuying surge even more than pandemic-sparked lifestyle changes.

Given rising inflation and consumer spending, mortgage rates are expected to increase throughout 2022. The Mortgage Bankers Association predicts 30-year mortgage rates will reach 4 percent by the close of this year.

What it means: Even at 4 percent, the rate on a 30-year mortgage is still undeniably appealing and empowering for buyers – just ask those a generation ago who endured rates in the high teens and even low 20s. But those who act soon will capture noticeable savings and gain added purchasing power if rates rise as expected. If you put 20 percent down on a $400,000 purchase, your monthly payment at a 3.3 percent rate is $1,730. If you wait and that rate swells to 4 percent, though, then your monthly payment jumps $126 to $1,856. Over the course of the 30-year mortgage, that’s more than $45,000 entering someone else’s pocket.

#2: Housing Inventory Will Improve Yet Remain Low.

In 2021, Chicago area homebuyers encountered inventory levels about half of what they could expect to see in a typical year. With a slim number of existing homes for sale, competition for available properties soared, especially given the number of homebuyers pulled into the market by those favorable interest rates and new housing needs or lifestyle changes.

According to Realtor.com, inventory levels are expected to improve throughout 2022, though the gains will be modest – about 0.3 percent – and continue pushing prices on existing properties upward. A National Association of Realtors report projects median home prices to jump nearly 6 percent this year. To be certain, that’s a cooling of prices on the resale market from 2021, but still a sizable increase that means buyers will be paying more.

What it means: As inventory of existing properties remains low, bidding wars aren’t going anywhere. The resale market will remain a competitive space demanding swift, decisive action from buyers. For some, that will undoubtedly increase the appeal of new construction, where buyers can enjoy a more transparent, straightforward process without pressure to make hurried decisions. Those who investigate new construction with Gallagher and Henry, for instance, will find a clear course of action and immediate value in building a new home.

#3: The Shine on the Suburbs Will Intensify.

Since the pandemic untethered people from their urban offices and enabled remote work, the suburbs have become an increasingly attractive residential destination. Buyers appreciate that they can get more bang for their housing buck in the suburbs alongside larger homes that can accommodate their new work-from-home or hybrid work needs, not to mention home gyms, three-car garages, flex rooms, and blank-canvas basements.

Industry insiders expect the suburbs to continue attracting homebuyers, even those who once swore their allegiance to urban life. With worry about commute times evaporating and suburban communities presenting a broader spectrum of residential opportunities, including new construction, the suburbs will emerge a more compelling option than ever before.

What it means: Homeowners have long prized suburban communities for the added space, contemporary amenities, and family friendly vibes they provide. As more prospective homebuyers explore what Chicago area suburbs like Lemont, Tinley Park, or Homer Glen have to offer, the appeal of suburban life will increase further. With new construction, in particular, those who act early in 2022 will be able to secure their preferred lots in single-family home communities and position themselves for a fall closing.

The COVID-19 pandemic changed so many aspects of daily life. From how we gather in groups to how we dine, from how children attend school to how we feel about germs, the pandemic has put new spins on our lives and unlocked new perspectives.

It has also changed what we want in our home and from our home.

Single-family homes have become that much more attractive.
Single-family homes have long been the preferred housing choice of many Americans. The pandemic, however, accelerated the appeal of single-family detached housing, which offers homebuyers their own space to spread out. According to data from Zillow, only one in five recent buyers have purchased a townhouse or condo, a clear sign that single-family homes are in exceptionally high demand.

And those single-family homes shouldn’t be small.
During the second half of the 2010s, there was a noticeable trend toward smaller homes in new construction. The pandemic flipped that script and a desire for larger homes continues resonating. At the close of 2020, the average size of a newly built single-family home was 2,473 square feet, according to U.S. Census data. The average is now pushing its way toward 2,600 square feet as homeowners crave additional space for living, remote work, recreation, and more.

Work-from-home spaces are a must.
Make no mistake, work-from-home spaces are prized in the post-pandemic era. According to Zillow’s 2021 Consumer Housing Trends Report, 30 percent of homebuyers moved recently because they were working remote more often. By 2025, an estimated 70 percent of the U.S. workforce will be working remotely as least five days a month. The shifting dynamics of workplaces have altered our housing needs with private spaces for work, whether spare bedrooms, flex rooms, or dedicated offices, becoming that much more important to homebuyers.

Storage gains heightened emphasis.
When Gallagher and Henry surveyed prospective homebuyers to inform the creation of its Lifestyle Series home plans in 2010, buyers identified storage as one of their top priorities. The value of storage has only accelerated since. In 2019, 64 percent of buyers labeled “ample storage” as “very important” or “extremely important” in assessing properties, Zillow reports. In 2021, that figure swelled to 75 percent. Extra storage space helps a home from feeling cluttered and helps facilitate organization. Storage space also enables homeowners to shift their physical spaces with the seasons or holidays to boost mood.

Outdoor living takes on added importance.
As many Americans spend more time at home, functional outdoor living space is becoming more and more appealing. Yards and patios offer opportunities for adults to gather and children to play. Homeowners are also decking these spaces out with outdoor kitchens and built-in firepits as well as pools and hot tubs for outdoor relaxation or recreation. While only 24 percent of buyers in 2019 called a hot tub or pool important in their home search, that figure jumped to 35 percent in 2021, according to Zillow.

Colorful kitchens bring energy to pandemic-era living.
The all-white kitchen delivers a timeless look, but a growing number of buyers are adding some energy to their kitchens with colorful cabinets and countertops, and especially so in new construction where homebuyers are less likely to be concerned about resale value compared to the fixer-up crowd planning to buy, renovate, and move. For many, the jolt of color serves a creative expression of their personality and a way to inject some added flair into the heart of the home.