NASHVILLE, Tennessee (WKRN) – The 2021 real estate market was a whirlwind for many, with hopeful buyers wondering what to expect in 2022.
Final figures for 2021 show that there were 47,172 homes sold in the region, up from 44,850 closings in 2020, with sales up 5%.
Will the new year look like the old one? Partially.
Steve Jolly, president of Greater Nashville Realtors, says there are three specific things to watch out for in 2022: supply, appreciation and interest rates.
We will start with the offer or the lack thereof.
Inventories at the end of December were 3,624 compared to 5,722 in December 2020.
“If you look at the new listings in the Nashville market, new listings were down 34.5% in December,” Jolly said, adding that one of the biggest challenges going into 2022 will continue to be the lack of inventory.
For those who are patiently waiting to buy their dream home or perhaps their first home, this is not what you wanted to hear.
“In 2021, median home prices rose about 22.4% in Middle Tennessee,” Jolly said.
The median price of a single-family residential home was $ 437,362 and for a condominium it was $ 298,918. This compares to last year’s median home and condominium prices of $ 345,000 and $ 245,000, respectively.
“I still think we’ll see prices go up in 2022,” Jolly said.
Expert projections for the increase in home values in 2022 range from 6% to a maximum of 19.8% locally.
“I expect the appreciation to be eight to 10 percent,” Jolly said.
Jolly says the biggest challenge will be rising interest rates due to inflation. In December, the Federal Reserve announced it would phase out its bond purchases by March 2022, putting upward pressure on mortgage interest rates, Jolly wrote. Additionally, the Federal Reserve also plans to hike the federal funds rate up to three times per year between 2022 and 2024.
“Rising interest rates will be the number one threat to the Nashville market in 2022,” Jolly said. “If you are considering buying a home I would start working on it right now for every 1% increase in interest rates buyers lose 11% of their purchasing power and that can really hurt in a market where the prices are already high. ”
To break it down by price, if you were allowed to buy a $ 400,000 home with three percent interest rates, an increase to a four percent rate brings your approved purchase price down to $ 356,000. . That makes all the difference !
Jolly says that if you are planning to buy a home this year, it is imperative that you start early.
“If you’re interested in buying a home in 2022, this is probably when you have the best opportunity to research homes, find available inventory with the least competition,” Jolly said.