05 Jan What to expect in 2022
What to expect in 2022
After two years of COVID we are beginning to wonder what the new normal is. Despite these historic circumstances, we can predict most of what will happen in real estate in the first half of the year.
What will happen with interest rates?
The Federal Reserve is cutting back on their stimulus by ending the monthly bond-buying that kept interest rates down. What will impact Minnesota real estate the most is that they will raise rates three times next year. This will have put the brakes on the refi-market. What you will see is mortgage companies, title insurance companies and appraisers will see a sharp drop in business. This will benefit home buyers with faster close times since lenders will have more time on their hands. Rates on conventional mortgage are about 3.6 % now and I predict it will be 4 % by the spring.
What will the inventory of homes look like in the next 6 months?
Last year our inventory of homes was down from the previous year. That trend will continue this spring and summer. We have 3.2 million people in the seven county Twin Cities real estate market and only
5,000 available homes to buy is just not enough. As in example we had 36,000 homes for sale in 2009 and the Twin Cities metro area has grown since then.
How will this affect home sales in Minnesota?
What to expect in 2022? Rising interest rates will decrease what a buyer can afford. This will limit some buyers from purchasing as prices increase. The inventory of homes will continue to be about 20 % less than last year. As a result, our yearly sales will diminish proportionally. We will continue to see multiple offers and substantial appreciation this spring and summer. We suggest you use an experienced agent who can help you navigate this competitive Minnesota real estate market.
I hope this blog about what to expect in 2022 was helpful.
Please reach out to me if you have questions about housing in Minnesota at 612-386-8600.
Look for more articles and videos in the future on various aspects of real estate and our state of Minnesota.
Real estate is a wonderful investment!
The Anderson Team