An April Look At Our 2022 Housing Market Predictions

Published April 13, 2022

Back in January, we gazed into The Official Allen Brake Team Housing Market Crystal Ball and asked the question “Is the housing market about to crash?” Now that we’re a quarter of the way through 2022, let’s take a look back at our prognostications and see how close we are so far to what we’re actually seeing in the regional housing market. 

What we said 

As a refresher, here are the highlights of what we said we saw when the year began:

  • The year 2021 saw the confluence of pandemic-induced historically low mortgage rates below 3%, a boom of remote work that allowed people to explore living further away from the office and a wave of millennials reaching the age people typically enter the housing market. 
  • The combination of these forces flooded the housing market with would-be buyers at a far greater clip than homeowners looking to sell their homes. 
  • This created scarcity, and, as we pointed out back in January, when demand exceeds supply, prices rise. Indeed, year-over-year home prices soared nearly 20% from August 2020 to August 2021. 
  • We saw this issue continuing well into 2022 and, perhaps, beyond. We mentioned how mortgage rates would likely rise and push some home buyers to the sidelines, but that wouldn’t be enough to counteract another year’s worth of millennials entering the market to buy. 
  • We pointed out the wide variety of opinions on what home prices would do in 2022, showing Zillow and Goldman Sachs predicting increases in the 16% to 19% range while RedFin was calling for a 4.6% jump and CoreLogic saw only a 1.9% bump. 
  • We said we thought the Zillows and Goldman Sachs of the world were overshooting what would actually happen – and that RedFin and CoreLogic were faulty in their analysis because they were lending too much weight to mortgage rate hikes while ignoring the millennials.
  • We said year-over-year price increases would likely be in the high single digits. 

What’s happened so far

If you’re needing a reason why you should turn to an established local real estate team to get your information about the housing market, what’s happened so far in 2022 is it. 

  • Mortgage rates have, indeed, risen – and risen dramatically. Out-of-control inflation pushed the Fed to act decisively on interest rates and, more importantly, signal that further rate hikes are coming soon. That quickly pushed the 30-year mortgage rate past where others said it would reach when 2022 ended – 4%. By the end of the first quarter, we already were seeing rates above 5%, even for those with good credit. 
  • These higher interest rates have, indeed, pushed some buyers to the sidelines, especially compared to 2021 levels. Interest in obtaining a mortgage has fallen by more than 40% nationwide, and refinance applications are down more than 60%, But … 
  • Though those numbers are significant, they are being countered by exactly what we said was going to be the main factor in the market in 2022 – millennials looking to buy. For as much as that drop in mortgage applications seems, it’s still not enough in raw numbers to change the supply/demand imbalance. 
  • If no other houses were put on the market in the St. Louis region starting today, the available inventory would dry up in somewhere around 14 to 20 days. A balanced market happens when that number is around three months. And that months-of-inventory number isn’t improving with higher interest rates. In fact, it’s more than 17% lower than it was this same time a year ago in St. Louis County. 
  • Thus, what happened in 2021 is continuing to happen in 2022. It’s what happens in any industry when demand outpaces supply: Prices increase. For the week ending April 8, the average home in St. Louis County sold for 3.1% more than it did at the same time a year ago. That’s on pace to be far less than what Zillow and Goldman Sachs said was going to happen and far more than what Redfin and CoreLogic said. In fact, it’s very much on pace to be somewhere around what The Official Allen Brake Team Crystal Ball said it would be by the end of 2022.

What’s going to happen this year

To see clearly what’s going to happen over the rest of 2022, let’s look at The Allen Brake Team’s numbers from March. In that month, we listed 14 homes. All 14 sold. All saw multiple offers. All sold for above list price. All were under contract less than 72 hours after their premiere open house. For the year, homes in St. Louis County are going for about 1.2% more than their list price. 

What we feel is going to happen in 2022 is exactly what we said in January. 

  • Interest rates are going to continue to rise. It’s not unrealistic to think we’ll be around 6% by the end of 2022. 
  • Because of this, some buyers are not going to be able to afford to buy a home and will delay their purchase. 
  • Supply is going to continue to be far less than demand, driving prices up year-over-year in that high single digit range we predicted in January. 
  • Sellers are going to continue to receive top dollar for their homes. 
  • Buyers are going to have to act fast and be prepared to lose out on some bidding wars and be patient and perseverant if they want to find a good home in a good neighborhood. 

What this means for you

Sadly, what you’re hearing in the mass media is a doom-and-gloom prediction of an out-of-balance housing market. That’s a Chicken Little mentality. The sky – and the housing market – is not falling. It’s still incredibly possible to win in this market, whether you’re a buyer or a seller. 

Here’s what our analysis of the housing market means for you: 

  • If you aren’t even thinking about selling your home, you should. Yes, even if you love your home. Yes, even if you love your neighborhood. Just like you’d check from time to time on the price of a stock you own, you should check how much your home could fetch in a market like this. Visit allenbrake.com/homevalue, and you can do that fast and free. 
  • If you are thinking about selling your home, spend a few dollars to do some basic upkeep and improvements to get it market-ready and you likely will see a tremendous return on your investment. 
  • If you have been thinking about downsizing or cashing out and moving into, say, a senior living community or a nice apartment complex now that the kids are grown and out of the house, you are in an extremely good position to add a good stack of cash to your retirement nest egg. 
  • If you are looking to buy – and we cannot emphasize this enough – do not be scared. The media has done a great job of making it seem like it’s impossible to find a good home. The success of our buyer’s agents tells us that’s wrong. They are finding great homes for a diverse set of home buyers – everyone from first-time buyers looking for a starter home to those searching for their dream home at $750,000 and up. Winning as a buyer in this market is possible and is happening. You simply need to have patience, perseverance and realistic expectations about the time it might take to land a great home that works for you and your family. 
  • That said, if you are looking to buy, you have to do your part to be prepared. Before you even think about looking at homes that you might fall in love with but aren’t ready to act fast to purchase, pause and do a deep dive into your financial situation. Figure out exactly how much you have to contribute as a down payment, and talk to a qualified lender to see the size of the mortgage you qualify for. The Allen Brake Team’s clients have access to our preferred lenders, with whom we’re happy to put you in touch. Getting pre-approved for a loan is essential in this market so that, when you do start looking at homes and find one you want to make yours, you’re able to quickly put in a solid offer backed by a reputable lender and a great real estate team. 

So there you have it – our first-quarter review of our 2022 housing market forecast. As you can see, experience in this market and this marketplace matters. The Allen Brake Team has more than 100 years of combined experience in the real estate industry right here in the St. Louis region. 

If you have any real estate questions or simply would like to explore the possibility of buying or selling, contact us today. 


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