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Looking to 2022: 2021 buyer’s remorse in housing market


YOUNGSTOWN, Ohio (WKBN) – Many buyers who got squeezed out of the 2021 real estate market are looking to 2022 for calmer seas. Whether that is going to happen remains to be seen.

2021 was a record year with average home prices increasing nearly 20%. Homes were flying off the market with multiple offers, no inspections and buyers paying over asking. But that frenzy has made many weary and many more suffering with buyer’s remorse.

According to a Bankrate survey, 64% of Millenials, which drove much of the housing market in 2021, say they regret in some form or another their home purchase. Many said they thought they paid too much or didn’t get the best mortgage rate they could have. They also said the cost of homeownership was more than they expected. Slowing down would have helped.

The remorse among Gen X buyers (those 41 to 56 years old) was lower at 45%, and for those over 57, it was the lowest of all 33%.

Coming off of 2021, many buyers are digging their heels in and waiting for what 2022 brings. Mortgage rates have already increased, slightly, and that increase is expected to grow over the next several months.

Some experts say the real estate market peaked in 2021 and others are saying 2022 could be even hotter. However, a record-low 26% of consumers thought now is a good time to buy a home, according to Fannie Mae’s Home Purchase Sentiment Index for December.

“Over the past year, low mortgage rates plus government stimulus programs helped increase mortgage demand, but the bidding-up of homes increased prices to record levels, making affordability a greater constraint for both first-time and move-up homebuyers. Among homeowners, the ‘good time to buy’ sentiment fell 30 percentage points over the past year to its current level of 30%; for renters, it fell from 37% to 21%. Even though demand remains strong, a majority of consumers clearly have reservations about purchasing a home at current prices,” said Doug Duncan, Fannie Mae senior vice president and chief economist.

Increasing mortgage rates and inflation concerns will impact affordability into 2022, but that could free up some properties as more buyers step back.

According to Fannie Mae, more new homes are expected to come to market in 2022, which should provide some inventory relief, but it may not be enough to meaningfully impact home prices.

Affordability will continue to be a challenge in 2022, Duncan said.

The good news is a “new normal” is on the horizon. While inflation is expected to remain elevated, home sales and house price growth will slow to a more sustainable pace. The latest forecast projects home price appreciation to clock in at a still-brisk 7.6 percent in 2022 – as measured by the FHFA Purchase-Only Index – but down greatly from 2021’s expected 17.3 percent.

The consensus across the industry is that even if house prices level off, they are likely not going to decrease substantially as supply and demand will remain a component through 2022.

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