My Perfect Mortgage
Market Analysis Signs of Moderation in Home Price Gains
3 minute read
January 4, 2022

A recent dip in annual home-price gains may be an indicator of what’s to come this year.

The 19.7 percent annual home-price gain in September lowered to 19.1 percent in October, according to the S&P CoreLogic Case-Shiller Index. 

This dip marked the second consecutive month of declining gains. While these gains are still high, they do reveal a noticeable slowdown after months of increases.

However, experts say 2022 will be another year for strong home price growth, with an average 7 percent increase.

This increase is slower than 2021, but still higher than the average 5 percent increase from the past decade.

The growth is expected as a result of the stiff competition for limited inventory. The recent decrease in gains was apparent in colder, more expensive areas.

Meanwhile, cities are still experiencing strong growth. Los Angeles currently has the highest home price index reading, while Detroit and Cleveland are at the bottom.

Zillow is predicting metro Denver will reach 17.5 percent gains this year, due to a “severe lack” of supply, experts say.

However, according to Zillow, builders have had issues keeping up with inventory demand in Denver since the housing crash more than a decade ago.

While some sources are predicting double-digit gains for big cities, others are predicting more reasonable growth, comparable to the 7 percent national increase.

Experts are reminding prospective buyers and current homeowners that the rate at which home values are appreciating should slow down regardless, due to lack of inventory and lack of interest from buyers who can’t compete with the high prices.

Plus, mortgage rates will continue to rise, which could prevent some buyers from moving forward.

Despite these fluctuating factors, experts say it’s still a great time to move forward with a home purchase or refinance.

While rates will rise, they are expected to remain historically low overall. And despite some areas still acting as a seller’s market, others will present more opportunities for buyers.

Experts say home prices pushing all-time highs can’t remain sustainable, so stabilization is imminent throughout the year.

Meanwhile, builders will continue to construct homes as quickly as possible to address the inventory issues. 

Additionally, the foreclosures and evictions that stalled during Covid will continue this year, which will add to the supply.

While home prices remain high, experts also suggest homeowners take advantage of the equity available in their homes — if it’s financially feasible to do so — by using a cash-out refinance.

Above all, experts recommend reaching out to a mortgage lender to determine the best course of action for your situation, whether it be a home purchase or refinance.

Photo by Pixabay from Pexels

Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.