Housing Trends for the Denver Metro and Surrounding Mountain communities in 2022
What can we expect for mortgage rates, home prices, and new opportunities for investors and buyers in 2022 and what does this mean for our community?
The coronavirus pandemic impacted the housing market in big ways beginning in 2020. Mortgage rates plummeted and a 30-year fixed rate average was around 2.93% in Jan 2021 according to Bank rates National, a survey of Lenders. In 2022, we will see rates increase due to inflation (Dec 2021 inflation rate rose to 7%). Since interest rates are the #1 driver of real estate boom, we expect to see a slow-down in the Denver market and surrounding communities. Interest rates are expected to rise to around 4% by the end of the year. Although we may see a slowing, the market will most likely remain strong (even in the 1980s, internet rates were close to 18% and people were still buying homes).
Price appreciation is slowing, according to the National Association of REALTORS® Chief Economist Lawrence Yun. He predicts homes to see an appreciation of 2.8% in 2022. This means Coloradans should see less bidding wars and eliminating the frightening possibility of many working class people to experience home prices soaring, outpacing their raises.
It seems everyone is eager to invest in the Denver Metro, but what should we expect as an investor? As we are seeing more and more people work remotely, many are choosing to move outside the city in search of more space and less hustle and bustle of the big cities. This is creating more of a buyer’s market directly inside the city, and many listing are staying on the market longer. Buyer friendly markets mean investors are able to purchase homes and condos with less bidding wars, even being able to offer less and even get credits for additional repairs and inspection items.
This leverage allows experienced agents to negotiate deals like we used to be, ensured a great investment for our clients. The rental market in Denver is still very much in demand, so the 2022 market may be a good time for investors to purchase rental properties in the beginning of this year while interest rates are still low. Another great opportunity for investors in 2022 is the end of mortgage Forbearance. More inventory of homes in foreclosure may open doors for investors and Colorado families to find more affordable homes. Although the price of lumber is still high, many investors are finding ways to build small, economic homes outside the major cities which appeals to people working remotely, and these professionals are still willing to buy at high price points.
A new wave of inventory from new builds seems to be coming to the rescue for buyers in 2022 which may also help the already cooling sellers market. Although new builds are great options for some, you should also consider the lack of import many long-term amenities that are appealing to buyers such as smaller lots, higher HOA’s and farther from major cities.