Real estate has been challenging for many buyers this year, with home prices up sharply and inventory at record low levels. Some buyers may get a break in 2022, but it’s not likely to be in some of the nation’s smaller cities that have seen strong housing demand due to remote work during the pandemic.
The cities that are likely to see the strongest price increases and home sales are described as second-tier cities that offer better affordability and more space compared with the nation’s largest cities, according to a new forecast from Realtor.com. It based its forecasts on recent home sales as well as economic trends, such as unemployment and household growth.
Boise, Idaho, is again likely to be near the forefront in 2022, Realtor.com predicted. That comes after local property prices surged more than 30% in the third quarter, and Boise was named the least affordable housing market in the U.S. — with the city’s median home price jumping to almost $535,000, or 10 times the city’s median income.
Boise is attracting people who want to relocate from expensive tech hubs like San Francisco, people for whom those prices may seem like a deal compared with pricing in bigger cities. And that trend is likely to continue in 2022, said Realtor.com chief economist Danielle Hale.
“2021 was an ultracompetitive year for the real estate market, especially for smaller secondary tech markets. They benefited from knowledge workers being freed up from going into the office every day,” Hale noted. Next year will be “in many ways a continuation of what we saw this year.”
She added, “People are embracing the flexibility of the workplace and moving into areas that are more affordable.”
Most of the top 10 markets for 2022 have a “small-town kind of quality of life, yet they still have thriving local economies,” Hale noted.
Big cities may lag smaller ones
Average home prices in the top 10 real estate markets are expected to jump 7.4% next year, or more than twice the national pace of 2.9%, Realtor.com said. Buyers may get a break next year with more inventory entering the market, relieving some of the low-stock issues that hampered home purchasers in 2021, Hale noted.
Many big cities like New York and Los Angeles are forecast to see price appreciations but may not match some of the smaller cities, according to the forecast. Prices in the New York metropolitan region, for example, are predicted to rise 2.3% in 2022, while home prices in the Los Angeles are likely to rise 4.8%, Realtor.com said.
“Real estate has really rebounded across the board, even though secondary markets have fared better,” Hale noted.
One thing to keep an eye is the Omicron variant of the coronavirus, she added. The fear of infection could make homeowners less likely to put their homes on the market, which could then crimp inventory levels next year, she added.
Below are the top 10 markets for 2022, based on estimates from Realtor.com. Forecasts include the change in number of homes sold as well as prices for 2022 versus 2021.
1. Salt Lake City, Utah
- Predicted sales change: 15.2%
- Predicted price change: 8.5%
- 2021 median home price: $564,062
2. Boise City, Idaho
- Sales change: 12.9%
- Price change: 7.9%
- 2021 median home price: $503,959
3. Spokane-Spokane Valley, Washington
- Sales change: 12.8%
- Price change: 7.7%
- 2021 median home price: $419,803
4. Indianapolis-Carmel-Anderson, Indiana
- Sales change: 14.8%
- Price change: 5.5%
- 2021 median home price: $272,401
5. Columbus, Ohio
- Sales change: 13.7%
- Price change: 6.3%
- 2021 median home price: $298,523
6. Providence-Warwick, Rhode Island-Massachusetts
- Sales change: 8.1%
- Price change: 9.5%
- 2021 median home price: $419,813
7. Greenville-Anderson-Mauldin, South Carolina
- Sales change: 11.4%
- Price change: 5.7%
- 2021 median home price: $305,078
8. Seattle-Tacoma-Bellevue, Washington
- Sales change: 9.6%
- Price change: 7.5%
- 2021 median home price: $666,754
9. Worcester, Mass.-Connecticut
- Sales change: 8.4%
- Price change: 8.2%
- 2021 median home price: $397,188
10. Tampa-St. Petersburg-Clearwater, Florida
- Sales change: 9.6%
- Price change: 6.8%
- 2021 median home price: $335,814