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What You Can Expect from the Housing Market in 2022 – and How It Might Shape Your Homebuying Plans

  • March 24, 2022

What You Can Expect from the Housing Market in 2022 – and How It Might Shape Your Homebuying Plans

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, 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.