Despite the increase in economic pessimism reported by Fannie Mae's Home Purchase Sentiment Index, Zillow economists are still forecasting an 11% increase in home values and more home sales than any year since the housing crash for 2022.
According to Zillow economists, the strong sellers market will persist next year and flexible work conditions will continue to shape housing decisions.
“Zillow’s forecast calls for 11% home value growth in 2022. That’s down from a projected 19.5% in 2021, a record year-end pace of home value appreciation, but would rank among the strongest years Zillow has tracked,” according to the report. “Existing home sales are predicted to total 6.35 million, compared to an estimated 6.12 million this year. That would be the highest number of home sales in any year since 2006.”
The reported states that more Gen Zers and millennials will buy a second home before a primary residence.
“Young people today are savvy watchers of the housing market, in part because of time spent Zillow surfing,” according to the report. “Purchasing a 'second' home in a market more affordable than the one they live in is a way to break into the market and start building equity while mortgage rates are low, possibly teaming up with friends or family to lessen the financial burden.”
Meanwhile, Zillow economists expect the renovation boom to continue well into 2022, as more buyers make compromises on their purchases due to growing home prices and mortgage rates. On the other side of the spectrum, the report doesn't bode well for new construction gains. In fact, the report expect builder efforts to be spoiled by supply chain snags and labor shortages that are already limiting progress in the sector.
