As we begin the new year, it’s the perfect time to look back and reflect on where the housing market landed and begin to look ahead for what to expect in 2022. This past year was notable for many reasons, from more lockdowns to the remarkable growth in the housing market, it’s a year to remember.
If you’re thinking about buying or selling a home in San Diego, you’re going to want to read this overview of the housing market first. Let’s dive into the market recap and outlook for 2022 so you know what to expect and can find out when it’s going to be the best time to sell or buy a home in San Diego.
2021 Real Estate Recap
The pandemic had a direct effect on the housing market as a lot of people started working from home and were re-evaluating their living situations. Many families felt like they needed more space, considered moving to a new location, or were thinking about buying their first home. It seemed as if there was a home-buying frenzy where everyone simultaneously decided they needed to move, and we’re seeing the effects from that today.
There was an evident shift over the last year where the home selling price rose 13.5% compared to 2020. This rise in price was due to the increased demand and there weren’t enough homes available to keep up the supply. It led to a highly competitive market and became very favorable to sellers. The housing bubble continued to grow the entire year when the demand for homes was outweighing the available supply, and we saw this peaking in May and June.
Over the last two years there’s been a steady, consistent rise in median home prices. At the end of 2020, the median home price in San Diego was hovering around $700,000. By the end of 2021, we’re close to an extraordinary $850,000 for the median price and experts are predicting that it’s likely to stay steady at the beginning of 2022 with a slight increase over time. The inflation we saw this past year also correlates with real estate pricing because it affects construction rates, asset prices, and long term interest rates.
From bidding wars to housing bubbles, 2021 was a unique year for how highly competitive the housing market was. Some homes were regularly getting 20+ offers, sometimes from people who hadn’t even seen the property in person. It was a seller’s market this past year because of the decreased supply and increased demand. There was a slight dip starting around September where home sales declined, but people are expecting that to start to trend back up.
Housing Market Outlook for 2022
With the pandemic affecting home buying patterns, we saw record low mortgage rates and many new first-time homeowners and millennials stepping into the market. We’re at the point now where we can start looking ahead in 2022 and predict where everything is heading based on historical trends and the shifting dynamics as we go into the third year of Covid.
Experts are predicting that the housing market will remain strong in 2022 and that it will be another unprecedented year but at a slightly slower growth rate. Home prices and home sales are expected to continue to rise. The current projections are also predicting that mortgage rates will likely increase this year as well. It’s expected that more and more first-time home buyers will enter the market and one driving factor of this is the increasing rent prices which are expected to go up by nearly 7%.
With jobs offering more and more flexibility by allowing employees to work from home, there’s a wider range for where people can look for housing. Many people are no longer limited by having to live near their job location. There are also some early indications that climate change may be affecting people’s home searches where people might not be as quick to jump on buying a house near rising shore lines.
The ongoing supply chain issues will still likely be a problem into 2022 which affects new housing developments. This will drive up the cost since there are fewer houses in the market currently as well as fewer under construction and will increase competition as well as contributing to driving up the costs.
The demand for buying a home isn’t changing any time soon and will only continue to increase over 2022. If you’re considering buying a home in San Diego, now is the time to act and invest. The sooner you can get in at the current prices, the better your position because your home value will only go up with time. The best thing you can do is find a realtor that knows the market and can help you make informed decisions based on your personal circumstances.
Contact San Diego Realtor Nick Rogers Today for a free consultation about buying or selling a home in San Diego.