2022 Housing Market 12 months In Overview

17 housing traits that outlined the yr, together with document house costs and sky-high mortgage charges

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

Usually, 2022 was a response to the dramatic actual property increase in 2021. The yr 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 hire 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. Residence costs rose to an all-time excessive

In Could, the everyday house 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% yr over yr, the most important proportion improve during the last 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 via 2022. In April and Could, mortgage charges rose to fight rising inflation, which started reversing housing traits from earlier within the yr. 

Regardless of a shortly cooling housing market, costs are nonetheless larger at present than any earlier yr 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% yr over yr. 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 yr went on, costs dropped nearer to pre-pandemic ranges, which can possible proceed till mortgage charges fall additional.  

• Six of the highest ten most costly metros had 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 giant metros within the nation. 

The highest ten most 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 take into consideration 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% yr over yr. Residence costs in Detroit hit $213,000 for every week in June, making it the most costly month of the yr however nonetheless practically 50% decrease than the nationwide median. Usually, year-over-year value will increase in 2022 had 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 had been all situated within the Rust Belt, a geographic area close to the Nice Lakes.
• Philadelphia was the one giant 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 take into consideration native median incomes and residential affordability. 

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

Lease costs in 2022 had been 12.8% larger than they had been in 2021. Nationwide, the median hire value rose to $2,053 in August earlier than dipping barely, the best on document and a 12.3% improve year-over-year. Following the pandemic, hire costs skyrocketed largely due to a lack of provide and a increase in demand, each of that are simply now balancing out.

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

There are at present over 1.1 million rental models underneath building within the U.S., which can come out there for hire over the following yr, serving to to alleviate a part of the housing scarcity.

“We count on rents to fall in practically 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 usually 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 improve come spring, and thus persistence for a very good deal will repay. And don’t be afraid to barter; some landlords could also be open to concessions like a free month’s hire or free parking.”

The highest ten most costly cities for renters in 2022

The highest ten least costly cities for renters in 2022

Information consists of the 2022 aggregated median hire 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 seeking to relocate favored Solar-Belt cities

24.1% of homebuyers seemed to maneuver to a distinct 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 seemed to maneuver to sunny, comparatively reasonably priced areas, with Miami, Tampa, Las Vegas, and Phoenix being the preferred locations.
• Homebuyers seemed 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 widespread relocation metros skilled extreme drought prior to now yr, 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, traits in some widespread locations reversed course after they grew to become too widespread, aggressive, and costly. Cities like Salt Lake Metropolis, Phoenix, Tucson, Dallas, and San Antonio all declined in recognition in 2022.”

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

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

The costs of products and companies rose to six.48% yr over yr in November, the best proportion since August 1982 and greater than double the speed from November 2021. In truth, inflation charges have doubled in comparison with the earlier yr in each month since June. Rising costs severely restricted client spending and slowed practically each aspect of the housing market. 

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

Information courtesy of FRED. Information measures core CPI (much less meals and power) via November 2022. 

7. Mortgage charges ballooned to almost 7% in response to document inflation

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

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

• In widespread migration metros like Phoenix, Las Vegas, and Austin, larger mortgage charges and costly house costs harm patrons probably the most.
• In Phoenix, for instance, as mortgage charges climbed in Could and June, solely 21.5% of houses had been reasonably priced to patrons with a $2,500 month-to-month mortgage finances – a 28.5% drop from 2021.

Excessive inflation and rising mortgage charges typically deter patrons, however if you happen to’re in a position to afford it, possession stands out as the higher possibility. “Homeownership is a long-term funding that may result in important internet value positive factors, even with charges above 6%,” advises Dean Hayes, Space Gross sales Supervisor with Bay Fairness, a Redfin firm. “Mortgage charges will possible go down within the new yr, which means extra house 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 had been listed on the market via November, up 11.2% in comparison with the 9.5 million houses listed via November in 2021. Within the three months ending November 2022, the variety of houses on the market elevated by 15% yr over yr, the most important improve on document. 

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

“Patrons 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 fantastic funding. Properties are forecast to nonetheless recognize, even in gentle of present circumstances. Sellers ought to perceive that the market continues to be shifting. Properties don’t promote in 5 days, nicely over record value, anymore.”

Stock and provide are calculated in rolling 90-day durations, e.g., January 2022 knowledge is the three-month interval from November 1, 2021, via 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 at present 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 typically implies that there are extra patrons than sellers, whereas a better quantity means there are extra sellers than patrons. Stock and provide usually transfer collectively. 

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

• As patrons retreated attributable to 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 shortly 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 via this yr. Patrons now have much more selections than they did final Spring.”

Stock and provide are calculated in 90-day durations, e.g., January 2022 knowledge is the three-month interval from November 1, 2021, via 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. via November 2022, up 3% from a yr 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 total housing provide since 2011, when constructing rebounded after the monetary disaster. This development intensified in 2021 and solely lately 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’d love to shut on and can typically supply incentives.”  

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

Information courtesy of Census.gov. 

11. Residence gross sales fell practically 17% yr over yr 

5.62 million U.S. houses bought via November, down 16.6% yr over yr, a pointy lower from the 6.74 million bought in 2021 throughout the identical interval. Usually, between 4 and 7 million houses promote per yr, with the historic common sitting at simply over 5 million. 12 months-over-year house 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% yr over yr 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 via 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 median of simply 24 days available on the market, an 8.4% improve yr over yr in comparison with the 22 days available on the market in 2021. Since 2020, a housing provide crunch has been attributable to provide chain points, a power 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. 

“As a result of a slowing financial system and layoffs within the tech sector close to the top of the yr, many patrons paused their house search attributable to affordability and job safety,” notes Frank Vettesse III, a San Francisco Redfin agent. “This was considered one of many components that contributed to the dramatic slowdown in gross sales.”

• Could was the busiest month of the yr, with houses spending a median of simply 17 days available on the market.
• Within the 4 weeks ending December 4th, houses spent a median 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 energetic house listings skilled value drops 

On common, 14% of energetic houses on the market had value drops in 2022, up 4.7% yr over yr. In October, 22.6% of listings had value drops, a decades-long excessive. In truth, from February via July, the variety of houses with value drops rose from 5.7% to 19.5%, a record-fast improve. “The shift was dramatic,” says Christy Seaside, a Seattle-area Redfin agent. “The patrons who didn’t safe a house in the course of the top of competitors are actually bidding low. For instance, the identical sort of house that patrons had been prepared 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 best proportion of any main metropolis.
• Despite the fact that value drops had been frequent, median sale costs nonetheless elevated in virtually each metro within the county. 
• Many pandemic-era migration hotspots, similar to Tampa, Las Vegas, and West Palm Seaside, had a big proportion 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 via the summer season right here in Washington State,” says Darlene Haselton, a Tacoma, WA Redfin agent. “At present, houses which can be recent available on the market are beginning to transfer extra shortly. As mortgage charges dip additional, in-demand properties might begin receiving a number of presents.” 

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

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

14. 55% of houses had a bidding struggle

55% of houses had bidding wars in 2022, down from 64% in 2021. Coastal metros skilled the 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 financial 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 look ahead to mortgage charges to drop. “Until a house is priced $100,000 or extra underneath market worth, bidding wars are largely non-existent. Our workforce nonetheless hears of some multiple-offer conditions; in these circumstances, it’s usually a luxurious house in a high-demand neighborhood that’s priced very aggressively.” 

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

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

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

30.7% of houses had been bought with all money, up 2% yr over yr. In October (the newest knowledge out there), 32% of houses had been paid for with all money, up 2% yr over yr and the best share since 2014. 

• Florida was the preferred state for all-cash purchases, particularly Jacksonville and West Palm Seaside.
• 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 probably the most populous U.S. metropolitan areas, courting again via 2011. Information doesn’t embrace November or December.

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

Vying to capitalize on the housing and rental increase, buyers bought 233,701 houses in 2022 via September, a record-breaking 19.1% of all listings. Multifamily residential properties constituted the most important proportion of investor market share, with a median 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 proportion is the common of information from January-September. Information doesn’t embrace the final quarter of 2022. 

17. Luxurious house 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% yr over yr and the most important decline since 2012. Energetic listings dropped even additional, falling by 32.7% yr over yr. The median sale value for a luxurious house was $1,080,000, up 14.8% yr over yr. Costs reached their peak of $1,120,000 in the course of the three months ending Could, a 15.7% year-over-year improve. Nevertheless, value progress, listings, and gross sales slowed considerably as demand cooled later within the yr. 

• Within the three months ending November thirtieth, luxurious house gross sales fell by 38.1%, the most important drop on document. 
• Luxurious houses spent a median of 32 days available on the market via November, up 28.9% yr over yr
• Tampa was the quickest rising luxurious market, with costs rising by 32.3% yr over yr
• Luxurious house 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 Seaside. “Within the present market, most sellers with a value level of $1.5 million or larger want to organize to make their house 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 shifting 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.