2022 Forecast: Real Estate Market in Pennsylvania

The real estate market in Pennsylvania and nationwide was on fire in 2021. But what’s in store for 2022?

It’s always great to be informed, especially when it comes to a major purchase such as buying a home. So to help you out, we’ve put together our 2022 forecast based on expert opinions and industry stats. We’ll give you answers to some of your burning questions, like:

• What are interest rates going to look like this year?
• It’s been a seller’s market, but could that change soon?
• Is there another big crash coming?

Let’s look at what happened in the final months of 2021 and see what’s in store for 2022.

Interest rates

Interest rates in 2021 were at a record low, which was a huge driver for the booming real estate market in Pennsylvania and across the country last year. That’s because lower rates translate to lower monthly payments and higher affordability for buyers. Experts predict that mortgage rates will remain low for the foreseeable future this year. Even though we’re still in a seller’s market, it’s still a great time to buy because affordability is high compared to previous years.

Inventory will grow, which means appreciation will slow

2021’s incredibly high home values resulted from a perfect storm from an economics standpoint. Simply put, there was a surge in buyer demand, which exacerbated an already extremely low supply of homes. However, experts anticipate that there will be an uptick in inventory in 2022 and the years following, which will cause value appreciation to slow.

With such high demand, low inventory, and increased property values, there’s still one question that many people have on their mind…

Is the real estate market going to crash again?

Many people think that we’re headed for another 2008-like crash. But the reality is today’s market conditions have nothing in common with what caused that historical scenario. 

Again, there are too many buyers and not enough homes on the market, which is the cause for skyrocketing appreciation. This, however, doesn’t mean that there’s a bubble that’s about to burst — it just means that homeowners now have larger equity. Also, in forbearance situations, homeowners can sell rather than foreclose.

Real estate market in Pennsylvania: 2022 predictions

Home prices

Last year’s record-low inventory led to skyrocketing home values, but experts predict that will normalize towards the end of this year or in early 2023.

This doesn’t mean that homes will depreciate in 2022. It just means that appreciation will come down to a more modest level. Experts predict that this will be around 5.82% in 2022 compared to 2021’s average of 11.74%.

Mortgage interest rates

Last year, mortgage rates hit the lowest point they’ve been in history, reaching 2.65% in January. The important thing to remember is that although rates are still low, don’t wait for them to go down even more because that might never happen. Experts predict that rates will have increased more than half a percent or more by this time next year.

To put this into perspective, suppose you take out a $350,000 conventional mortgage at today’s rate of 2.99%. You would have a monthly mortgage payment (principal and interest) of $1,474. But if you waited until next year to take out the same loan, your mortgage payment would be $107 higher, at $1,581 per month.

Remember that an increase of even a fraction of a percent can increase monthly mortgage payments, which could stretch you beyond your budget. The bottom line is: this time next year you will pay more for the same house that you’d buy right now.

Inventory in 2022

Experts in the real estate industry predict inventory to grow in 2022 because of factors including:

• Homeowner confidence – People may be more confident listing their homes as COVID begins to normalize.
• New construction – Supply chain issues and other previous obstacles to new construction homes are beginning to fade, meaning new homes will add inventory to the market.
• Sales instead of foreclosures – With more equity in their homes, people will have the option to sell rather than foreclose, which will add inventory to the market.

Make your move in 2022

Now that you’ve got clarity about what to expect from this year’s real estate market in Pennsylvania, it’s time to get moving. Team Hadley will find you the right mortgage and help you lock in the best rate — whether you’re in the market for your first home or looking to refinance your empty nest.

Get in touch to see the options you qualify for and make your move in 2022.

Learn about the basics of home buying

If you’re new to home buying, download our Path to Homeownership Guide. You’ll learn everything you need to know about credit scores, interest rates, pre-approvals, and other essentials involved in securing a mortgage for your dream home.