Home Prices Broke Records in 2021. What should homeowners and buyers expect in 2022?

Posted January 06, 2022 by Treeium Inc.

When it comes to the cost of real estate, 2021 was a year for the history books. By November 2021, home prices increased by 18.1% from the previous year, leaving many home buyers wondering what to expect in 2022 and how to prepare for higher mortgage costs, inflation, annual appreciation, and potential changes in interest rates during unprecedented upward price growth.

Mortgage & Interest Rates

Mortgage rates are bound to increase with the increase in the cost of residential properties. However, high property values aren't the only factor that may lead to a rise in your mortgage in 2022.

Factors like property taxes, homeowners’ insurance, and interest rates are likely contributors to higher payments. Even with record low-interest rates going into the New Year, rates will climb eventually.

It's important to remember that not all interest rates are the same. More often than not, homeowners with a variable interest rate will pay less on their loans over time. For example: if two homeowners purchase two different homes, each for $500,000, but one has a fixed interest rate, while the other has a variable interest rate, each may find themselves paying drastically different amounts each month and over the loan period.

Inflation & Appreciation Rates

When purchasing residential properties in 2022, Inflation rates and annual appreciation rates are essential considerations among home buyers and sellers.

In the last month of 2021, United States inflation increased to 7% and is forecast to increase by another 6.2% in the first quarter of 2022. With the dollar's value decreasing and home prices rising, this makes home buying trickier than in years past.

Annual appreciation rates, or the increase in the value of an asset over time, are directly impacted by inflation and are another factor in investing in residential properties. When the economy takes a turn for the worst, inflation can work against homeowners and directly impact annual appreciation. For example – if you purchased a home in 2008 when the economy was poor, you likely purchased that house below market value. When the economy bounced back, the value of that home probably increased with annual inflation and as demand increased. Ultimately, the increase in inflation rates and annual appreciation positively impact many property owners when the housing market is competitive and booming. How to Handle House Buying in 2022

Though home prices continue to flourish, the acceleration is expected to level out in 2022 and decrease heading into 2023, per the HPI Forecast completed by Mortgage News Daily. Low home prices mean that homeowners must find new ways to increase property values before selling. Common ways to increase home value include:

• Remodeling high-traffic areas of the home like the kitchen and bathroom • Adding garage conversions or an ADU • Going Solar • Window & door replacement

For more information about real estate forecasts for 2022 and ways to keep your home value high, schedule a consultation with our financing specialist Rotem Levy at or give him a call directly at (818) 213 - 1438.

Posted January 06, 2022
by Treeium Inc..


Get Expert Advice

Lets connect! We are here to help you. Fill out the form below and we’ll give
you a ring to talk about your upcoming project.
Thank you for connecting with us!
One of our advisors will be
getting in touch with you shortly