2022 Housing Market 12 months In Evaluation

17 housing tendencies that outlined the 12 months, together with document residence costs and sky-high mortgage charges

The 2022 housing market was nothing wanting outstanding. The pandemic and ensuing distant work continued to outline how, when, and the place folks purchased houses. The median U.S. residence value hit a document excessive earlier than falling barely. Rising rents stretched renters’ budgets. Excessive inflation put elevated strain on nearly everybody. For the primary time in historical past, mortgage charges doubled within the span of only one 12 months. The record goes on

Usually, 2022 was a response to the dramatic actual property increase in 2021. The 12 months began with a surge in costs and progress throughout the board earlier than falling alongside document inflation within the fall. November and December noticed a a lot slower and seasonally-expected housing market, with year-over-year modifications in lease costs, home costs, and rates of interest both falling or slowing down. 

Beneath is a non-exhaustive record of information factors and visuals that outlined the 2022 housing market. 

1. Dwelling costs rose to an all-time excessive

In Might, the standard residence bought for $430,365, a document excessive since information started in 1963, shattering 2021’s excessive of $386,000. In March, the median sale value rose 16.8% 12 months over 12 months, the most important share enhance over the past 5 years. Following the pandemic, demand skyrocketed whereas provide remained traditionally low, inflicting a extreme housing scarcity and value increase that continued all through 2021 and peaked halfway by way of 2022. In April and Might, mortgage charges rose to fight rising inflation, which started reversing housing tendencies from earlier within the 12 months. 

Regardless of a rapidly cooling housing market, costs are nonetheless larger right this moment than any earlier 12 months on document. 

2. San Francisco was the most costly metro space for homebuyers in 2022 

The median sale value of a house in San Francisco was $1,505,000 in 2022, up 0.3% 12 months over 12 months. For one week in April, the median value reached a excessive of $1,700,000, slightly below 2021’s all-time excessive of $1,728,000. Because the 12 months went on, costs dropped nearer to pre-pandemic ranges, which is able to doubtless proceed till mortgage charges fall additional.  

• Six of the highest ten costliest metros have been in California.
• Many Florida metros skilled the most important year-over-year value progress, together with Tampa (18%), Orlando (14.9%), Jacksonville (14.7%), and Miami (14.2%).
• Tampa had the most important year-over-year value progress of all massive metros within the nation. 

The highest ten costliest cities to purchase a house in 2022

Information consists of the yearly aggregated median sale costs out of all houses bought in every of the 50 largest metropolitan areas. Information doesn’t consider native median incomes and residential affordability.

3. Detroit was the least costly metro space for homebuyers in 2022

The median sale value for a house in Detroit was $165,000 in 2022, up 3.3% 12 months over 12 months. Dwelling costs in Detroit hit $213,000 for every week in June, making it the most costly month of the 12 months however nonetheless almost 50% decrease than the nationwide median. Usually, year-over-year value will increase in 2022 have been smaller throughout most main metros than in 2021, and progress dipped additional heading into the primary week of December. 

• The highest ten least costly metros have been all situated within the Rust Belt, a geographic area close to the Nice Lakes.
• Philadelphia was the one massive metro that skilled a value lower in 2022.
• Kansas Metropolis, MO was the eleventh least costly metro, and the primary non-Rust-Belt metro on the record.

The highest ten least costly cities to purchase a house in 2022

Information consists of the yearly aggregated median sale costs out of all houses bought in every of the 50 largest metropolitan areas. Information doesn’t consider native median incomes and residential affordability. 

4. Hire costs rose dramatically as provide struggled to maintain up with demand

Hire costs in 2022 have been 12.8% larger than they have been in 2021. Nationwide, the median lease value rose to $2,053 in August earlier than dipping barely, the very best on document and a 12.3% enhance year-over-year. Following the pandemic, lease costs skyrocketed largely due to a lack of supply and a boom in demand, each of that are simply now balancing out.

• Median lease costs in New York rose to over $4,000, retaining its dominance as the most costly metro for renters within the nation.
• Lots of the least costly metros skilled the very best year-over-year lease will increase, together with Oklahoma Metropolis (23.3%), Cincinnati (17.6%), and Pittsburgh (14.8%).
• Oklahoma Metropolis skilled the very best year-over-year lease will increase within the nation.  
• Hire progress has constantly outpaced wages for many years, however the most recent data states {that a} staggering 40% of renters spent greater than 30% of their earnings on lease from 2017-2021.

There are presently over 1.1 million rental models underneath building within the U.S., which is able to come out there for lease over the following 12 months, serving to to alleviate a part of the housing scarcity.

“We count on rents to fall in almost each a part of the nation by the center of 2023 as provide begins overtaking demand,” notes Taylor Marr, Redfin Deputy Chief Economist. “Whereas renters sometimes get the most effective deal in the course of the winter months as demand is decrease, rents are persevering with to ease. Due to this, there received’t be as a lot of a seasonal enhance come spring, and thus endurance for a great deal will repay. And don’t be afraid to barter; some landlords could also be open to concessions like a free month’s lease or free parking.”

The highest ten costliest cities for renters in 2022

The highest ten least costly cities for renters in 2022

Information consists of the 2022 aggregated median lease costs for every of the 50 largest metropolitan areas in comparison with 2021 knowledge from the identical interval. Information is the median of all 0-3 bed room rental houses. 

5. Homebuyers trying to relocate favored Solar-Belt cities

24.1% of homebuyers appeared to maneuver to a unique metro in the course of the three months ending in November. That is on par with the document excessive of 24.2% within the third quarter and up from 19.1% in 2019. 

• Homebuyers appeared to maneuver to sunny, comparatively reasonably priced areas, with Miami, Tampa, Las Vegas, and Phoenix being the preferred locations.
• Homebuyers appeared to maneuver away from costly coastal metros like San Francisco, Los Angeles, and New York, which topped the record.
• 100% of houses in lots of well-liked relocation metros skilled extreme drought prior to now 12 months, together with Phoenix, Las Vegas, and Sacramento.

“Much like 2021, continued progress in distant work and a need for housing affordability drove relocation patterns in 2022,” Marr continues. “Nevertheless, tendencies in some well-liked locations reversed course after they grew to become too well-liked, aggressive, and costly. Cities like Salt Lake Metropolis, Phoenix, Tucson, Dallas, and San Antonio all declined in reputation in 2022.”

Information is the % of Redfin.com customers looking for houses outdoors their metro. Information is the 12 months median combination of a number of three month transferring aggregates and doesn’t embrace September-December. Sustain with the newest migration information right here. 

6. Inflation rose at a document tempo, affecting each side of the housing market

The costs of products and companies rose to six.48% 12 months over 12 months in November, the very best share since August 1982 and greater than double the speed from November 2021. The truth is, inflation charges have doubled in comparison with the earlier 12 months in each month since June. Rising costs severely restricted shopper spending and slowed almost each side of the housing market. 

• • To fight the historic inflation, the Fed raised its goal rate of interest to 4.5%, the highest in 15 years.
  • Skyrocketing rates of interest brought on mortgage charges to rise and elevated fears of a recession, preserving homebuyers out of the housing market.
  • Inflation rose the quickest in pandemic boomtowns due partly to the sudden soar in home costs, which is a key contributor to inflation.

Information courtesy of FRED. Information measures core CPI (much less meals and vitality) by way of November 2022. 

7. Mortgage charges ballooned to just about 7% in response to document inflation

After a long time of falling mortgage charges, in 2022, charges climbed to just about 7% in each October and November, larger than any level since 2002. The truth is, from October 2021 to October 2022, mortgage charges doubled in a single 12 months for the primary time in historical past. 

Because the 12 months got here to a detailed, optimistic inflation knowledge helped scale back housing rates of interest to under 7%.

• In well-liked migration metros like Phoenix, Las Vegas, and Austin, larger mortgage charges and costly residence costs harm patrons essentially the most.
• In Phoenix, for instance, as mortgage charges climbed in Might and June, solely 21.5% of houses have been reasonably priced to patrons with a $2,500 month-to-month mortgage price range – a 28.5% drop from 2021.

Excessive inflation and rising mortgage charges usually deter patrons, however if you happen to’re capable of afford it, possession will be the higher possibility. “Homeownership is a long-term funding that may result in vital internet price beneficial properties, even with charges above 6%,” advises Dean Hayes, Space Gross sales Supervisor with Bay Equity, a Redfin firm. “Mortgage charges will doubtless go down within the new 12 months, which means extra residence patrons will return to the market, creating elevated competitors and fewer room for negotiation.”

8. Housing stock rose after hitting a document low

10.7 million houses have been listed on the market by way of November, up 11.2% in comparison with the 9.5 million houses listed by way of November in 2021. Within the three months ending November 2022, the variety of houses on the market elevated by 15% 12 months over 12 months, the most important enhance on document. 

As mortgage charges rose alongside inflation, extra patrons determined to remain put, permitting stock to extend. Since December 2019, stock has declined 12 months over 12 months till it lastly rose in June 2022.

“Consumers have extra leverage now than they’ve since 2010,” advises San Francisco Redfin agent Josh Felder. “Even with larger mortgage charges, if you happen to intend to remain put for longer than 5 years, it’s a terrific funding. Properties are forecast to nonetheless admire, even in gentle of present circumstances. Sellers ought to perceive that the market continues to be transferring. Properties don’t promote in 5 days, nicely over record value, anymore.”

Stock and provide are calculated in rolling 90-day intervals, e.g., January 2022 knowledge is the three-month interval from November 1, 2021, by way of January 31, 2022.

9. Months of provide dropped to a near-record low of simply 1.2 months

Whereas stock measures the variety of houses presently out there on the market, months of provide measures the period of time it could take these houses to promote. 4 to 5 months of housing provide is taken into account the optimum benchmark. Lower than three months of housing provide usually implies that there are extra patrons than sellers, whereas the next quantity means there are extra sellers than patrons. Stock and provide sometimes transfer collectively. 

Nationwide, months of housing provide dipped to only over 1.2 months in March earlier than slowly rebounding in the summertime. 12 months over 12 months, months of provide has declined nearly each month since January 2020. 

• As patrons retreated on account of excessive inflation and rates of interest, months of provide started to develop in July and August, reaching 2.3 months of provide by September.
• In Seattle, months of provide reached a near-record low of simply 15.5 days in January and February, the bottom of any main metropolitan space.

“We’re rapidly working again towards a balanced market, which is three to 6 months of stock,” says Seattle-area Redfin agent Brian Shields. “We’ve been in a vendor’s market with lower than 5 months of stock for a number of years, till halfway by way of this 12 months. Consumers now have much more selections than they did final Spring.”

Stock and provide are calculated in 90-day intervals, e.g., January 2022 knowledge is the three-month interval from November 1, 2021, by way of January 31, 2022.

10. New building took up a rising share of housing stock 

There have been 1.25 million privately-owned new houses constructed within the U.S. by way of November 2022, up 3% from a 12 months in the past. As inflation rose and the market slowed, builders started slowing their manufacturing to dump what they already had. 

New building has been taking on a rising portion of general housing provide since 2011, when constructing rebounded after the monetary disaster. This development intensified in 2021 and solely not too long ago started to decelerate. “When you’re a purchaser, take into account new building houses,” advises Kim Stearns, a Northern Idaho Redfin agent. “Due to a list buildup, many builders have one to 4 houses they might love to shut on and can usually supply incentives.”  

• Over 63% of latest builds have been single-family houses, up 2% 12 months over 12 months
• New building begins dropped from their peak of 164,000 in April to 111,000 in November

Information courtesy of Census.gov. 

11. Dwelling gross sales fell almost 17% 12 months over 12 months 

5.62 million U.S. houses bought by way of November, down 16.6% 12 months over 12 months, a pointy lower from the 6.74 million bought in 2021 throughout the identical interval. Usually, between 4 and 7 million houses promote per 12 months, with the historic common sitting at just over 5 million. 12 months-over-year residence gross sales decreased in each month of 2022, with October and November posting the sharpest declines. 

• Simply 376,000 houses bought in November, down 37.4% 12 months over 12 months and a seasonally-adjusted historic low (since 2001).
• June was the busiest month with 626,641 houses bought, a 15.2% year-over-year dip.

Information was collected by way of November.

12. Median days on market rose at a document tempo, signaling a dramatic turnaround from 2021’s breakneck tempo

In 2022, houses spent a mean of simply 24 days available on the market, an 8.4% enhance 12 months over 12 months in comparison with the 22 days available on the market in 2021. Since 2020, a housing provide crunch has been brought on by provide chain points, a continual lack of homebuilding, and a rise in demand. In 2022, time available on the market ticked up as homebuilding started to catch as much as demand and excessive mortgage and inflation charges restricted patrons’ spending energy. 

“Resulting from a slowing economic system and layoffs within the tech sector close to the top of the 12 months, many patrons paused their residence search on account of affordability and job safety,” notes Frank Vettesse III, a San Francisco Redfin agent. “This was certainly one of many elements that contributed to the dramatic slowdown in gross sales.”

• Might was the busiest month of the 12 months, with houses spending a mean of simply 17 days available on the market.
• Within the 4 weeks ending December 4th, houses spent a mean of 37 days available on the market, the slowest month of 2022 and the most important year-over-year slowdown on document.

13. 14% of lively residence listings skilled value drops 

On common, 14% of lively houses on the market had value drops in 2022, up 4.7% 12 months over 12 months. In October, 22.6% of listings had value drops, a decades-long excessive. The truth is, from February by way of July, the variety of houses with value drops rose from 5.7% to 19.5%, a record-fast enhance. “The shift was dramatic,” says Christy Seashore, a Seattle-area Redfin agent. “The patrons who didn’t safe a house in the course of the peak of competitors are actually bidding low. For instance, the identical sort of residence that patrons have been keen to supply $200,000 over record value are actually providing $200,000 under record value.” 

• In Denver, 47% of houses skilled reductions in value, the very best share of any main metropolis.
• Regardless that value drops have been widespread, median sale costs nonetheless elevated in nearly each metro within the county. 
• Many pandemic-era migration hotspots, corresponding to Tampa, Las Vegas, and West Palm Seashore, had a big share of listings with value drops as nicely.

“As sellers with stale listings grew to become more and more anxious to get their properties bought, we noticed a steep rise in value drops by way of the summer time right here in Washington State,” says Darlene Haselton, a Tacoma, WA Redfin agent. “Presently, houses which are recent available on the market are beginning to transfer extra rapidly. As mortgage charges dip additional, in-demand properties might begin receiving a number of gives.” 

The highest 5 cities with the very best share of value drops in 2022

Information consists of the median value drops out of all lively listings in every of the 50 largest metropolitan areas. 

14. 55% of houses had a bidding battle

55% of houses had bidding wars in 2022, down from 64% in 2021. Coastal metros skilled the very best charges of bidding wars, together with Boston (69.8%) and Los Angeles (67.7%). 

Nevertheless, nationwide, bidding wars fell from 72% to 35% from February to November. A worsening economic system, larger mortgage charges, and a rise in provide contributed to the slowdown.

Shauna Pendleton, a Boise, ID Redfin agent, advises sellers to be affected person and anticipate mortgage charges to drop. “Except a house is priced $100,000 or extra underneath market worth, bidding wars are principally non-existent. Our workforce nonetheless hears of some multiple-offer conditions; in these circumstances, it’s sometimes a luxurious residence in a high-demand neighborhood that’s priced very aggressively.” 

The highest 5 metros with the very best share of bidding wars in 2022

Information consists of the median share of bidding wars throughout lively listings in every of the 50 largest metropolitan areas. 

15. Over 30% of houses have been bought with money in 2022

30.7% of houses have been bought with all money, up 2% 12 months over 12 months. In October (the latest knowledge out there), 32% of houses have been paid for with all money, up 2% 12 months over 12 months and the very best share since 2014. 

• Florida was the preferred state for all-cash purchases, particularly Jacksonville and West Palm Seashore.
• Costly west coast metros, together with Oakland, San Jose, and Seattle, had the bottom share of all-cash purchases.

Information is from a Redfin evaluation of county information throughout 39 of essentially the most populous U.S. metropolitan areas, relationship again by way of 2011. Information doesn’t embrace November or December.

16. Actual property buyers bought almost 20% of obtainable listings, a brand new document

Vying to capitalize on the housing and rental increase, buyers bought 233,701 houses in 2022 by way of September, a record-breaking 19.1% of all listings. Multifamily residential properties constituted the most important share of investor market share, with a mean of 30% of those properties being bought by buyers. 

Pandemic boomtowns grew to become the most important investor hotspots, particularly in Solar-Belt metros.

The highest 5 metros with the most important investor market shares in 2022

Information is analyzed on a quarterly foundation and consists of all property sorts except in any other case said. Complete share is the common of information from January-September. Information doesn’t embrace the final quarter of 2022. 

17. Luxurious residence gross sales skilled their largest year-over-year decline on document

In 2022, there have been 258,733 luxurious houses bought within the U.S., down 27% 12 months over 12 months and the most important decline since 2012. Energetic listings dropped even additional, falling by 32.7% 12 months over 12 months. The median sale value for a luxurious residence was $1,080,000, up 14.8% 12 months over 12 months. Costs reached their peak of $1,120,000 in the course of the three months ending Might, a 15.7% year-over-year enhance. Nevertheless, value progress, listings, and gross sales slowed considerably as demand cooled later within the 12 months. 

• Within the three months ending November thirtieth, luxurious residence gross sales fell by 38.1%, the most important drop on document. 
• Luxurious houses spent a mean of 32 days available on the market by way of November, up 28.9% 12 months over 12 months
• Tampa was the quickest rising luxurious market, with costs rising by 32.3% 12 months over 12 months
• Luxurious residence gross sales declined by 47% in San Jose, the most important fall of any main metro

“In Seattle, luxurious listings noticed the most important reductions in value,” continues Seattle agent Christy Seashore. “Within the present market, most sellers with a value level of $1.5 million or larger want to organize to make their residence stand out among the many competitors. As a rule, sellers are having to barter their value and phrases with patrons.”

Luxurious houses are outlined as the highest 5% of listings in a given market. Values are three month transferring aggregates ending on the date proven, e.g., November 2022 spans September, October, and November 2022. Information doesn’t embrace the three months ending December 31. 

Trying ahead

The 2022 housing market was chaotic, however what does Redfin predict for 2023? Learn our 2023 Housing Market Predictions to be taught extra.

All knowledge was compiled by the week ending December 23, 2022. Information is aggregated from January to November and doesn’t embrace December except said in any other case. All knowledge is from Redfin, FRED, and/or public information. For questions on metrics, learn our metrics definitions web page.