2021 saw record home price increases, but 2022 could be back to normal

Remember all the chatter last spring and summer about the sizzling U.S. real estate market and the upward pressure on prices? It prompted us to write headlines such as:

• The U.S. and others see home prices continue to skyrocket!
• Is a sizzling real estate market good for relocating employees? A look at home sale conditions.
• As home prices continue to surge, a key question is bubbling up

Now that we’re nearly two full months into 2022, we’re getting a glimpse of just how hot the market was in 2021. As CNN notes in the article below, home prices rose 18.8% last year, which was the biggest increase in 34 years and significantly ahead of the 10.4 percent jump we saw in 2020 (which was still a fairly significant increase).

According to the data, which comes from the CoreLogic Case-Shiller U.S. National Home Price Index, all regions in the country saw sizeable increases in 2021, with Phoenix, Tampa and Miami reporting the highest annual gains.

So what’s next? I noted recently that mortgage rates are starting to creep up, which figures to eventually put some downward pressure on prices and help cool down the market. CoreLogic agrees that the historic increases we saw in the last year are not sustainable, as they’re forecasting only a 3.5% increase between December 2021 and December 2022. That figure would be much closer to historic norms.

We started to see some signs of a cool down toward the end of last year, a process some real estate experts refer to as “normalizing.” It’s a good reminder to mobility teams that your best bet is to stay consistent and sound with your home sale program, rather than making wild adjustments in an attempt to ride the wave of the market.