There are two main factors that you should keep an eye on when doing a Connecticut housing market forecast for 2022:
- Housing Inventory
- Mortgage interest rates
These two factors are expected to shape the market in 2022. So, let’s talk more about them!
As mentioned earlier, the inventory shortage in 2021 was one of the main reasons that drove home prices up.
Since construction wasn’t happening, the homes that are available for sale on the market could barely keep up with the demand.
For this reason, the inventory continues to be an important part of any Connecticut housing market forecast in 2022.
Additionally, most foreclosures were put on pause in the past two years due to regulations related to COVID-19, which further added to the inventory problems.
But this year, it is expected that foreclosures will take place, which will release a large number of foreclosed properties that will become available for sale on the market.
However, near the end of 2021 going into 2022, the challenges that stood in the way of new home constructions are starting to get solved, and it’s expected that home construction will soon resume.
That would result in a healthier supply of homes for sale, which will directly affect home prices and slow down their appreciation.
Mortgage Interest Rates
Another factor that has shaped the market in the past two years is that mortgage interest rates were decreased, resulting in more people qualifying for a mortgage to buy a new home, driving the sales up. This was part of the COVID-19 mortgage relief program for real estate investors.
However, it is expected that in 2022 mortgage interest rates will increase again, which will disqualify a large number of people and remove them from the market as potential buyers.
And while this might decrease the demand that the market is currently seeing, our prediction in this Connecticut housing market forecast for 2022 is that the current demand is too high to be drastically affected by the increase in mortgage interest rates.