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Shauna Ray is President of the Northern Wasatch Association of Realtors.

After an unprecedented housing market, next year’s homebuyers can expect somewhat more normal conditions.

Economists are making their forecasts for the coming year and here are some of the trends they point to:

Rising house prices but at a slower pace

Instead of the 30% surge in home prices seen this year, next year’s homebuyers can expect home prices to rise, but at a slower pace.

That’s the consensus of 22 real estate economists who believe US home prices will rise 5.7% on average in 2022, according to a National Association of Realtors survey. Of those 22 economists, only two price cuts expected next year while 20 say there will be price increases ranging from 3.8% to 12%.

For Salt Lake City, Realtor.com predicts home prices will rise 8.5%. In fact, Realtor.com recently named Salt Lake City as its No.1 housing market for 2022.

Higher but still low interest rates

Due to high inflation, the Federal Reserve will reduce its purchases of mortgage-backed securities faster than initially expected. The program, which was put in place at the start of the pandemic, has resulted in ultra-low mortgage rates over the past year and a half.

After completing its purchases, the Fed also announced that it would raise short-term interest rates. Consensus forecasts from 22 economists showed a median forecast of two increases next year.

Due to Fed actions and current economic conditions, the National Association of Realtors expects mortgage rates to average 3.5% in 2022, up from 3% in 2021.

More choice of accommodation

Realtor.com and the National Association of Realtors expect home inventory to increase in 2022. Realtor.com says inventory for sale will grow an average of 0.3% in 2022. More homeowners say they plan to sell, and new construction projects are likely to hit the market, although supply shortages will hamper some construction.

Lawrence Yun, chief economist for the National Association of Realtors, said ending mortgage forbearance programs along with deaths from COVID would result in additional housing stock.

Continued demand for housing

While affordability will be a challenge, especially with rising prices and interest rates, demand from buyers and the market for sellers will likely continue into the next year. For Salt Lake City, Realtor.com predicts home sales will increase 15.2%.

Utah is also expected to see demand from out-of-state buyers who have the option to work remotely. The trend towards working from home is expected to continue, with employers looking for ways to attract and retain employees during labor shortages.

In fact, Realtor.com claims that one in five homeowners looking to sell no longer need to work near their office. Thus, the suburbs are expected to continue to be a popular location as shoppers seek more space.

Demographics also point to a strong year for home buying. Realtor.com notes that next year, the United States will have 45 million millennials among homebuyers, aged 26 to 35.

Expansions in real estate technology

Look for continued improvements in virtual tours and other real estate technologies to support online home hunters.

For example, enhanced virtual tours will help buyers find homes before visiting them in person and provide greater assistance to out-of-state buyers. New 3D tours and the use of artificial intelligence will help buyers quickly find properties that meet their specifications.

To learn more about the real estate trends to watch in 2022, contact a local real estate agent. Find the one that specializes in your neighborhood by searching the Northern Wasatch online realtor directory at NWAOR.com.

Shauna Ray is President of the Northern Wasatch Association of Realtors.

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