Albuquerque Real Estate Market Predictions 2022
I am constantly asked my thoughts on the Albuquerque real estate market for 2022. Accordingly, there will be some key drivers of the real estate market in 2022 and they are inflation, interest rates, and infections.
What will Happen with Inflation in 2022?
Remember when the Chairman of the Federal Reserve was calling inflation transitory? As it turns out, inflation is not transitory. Inflation is running at a 39 year high as of this writing. In fact, this inflation is caused by the Federal Government printing and spending too much money. Click on these links to see the recent increase in the M1 and M2 money supply. There is just too much money chasing goods and services. In conclusion, all this money causes increased prices.
In my opinion, inflation will stay high in 2022. The main tool the Federal Reserve has to fight inflation is to raise interest rates. We will talk more about interest rates later in this article. It is my opinion, the Federal Reserve will not raise interest rates enough in 2022 to slow inflation.
What does high inflation mean to the real estate market? Material building prices will increase thus, new home prices to increase. In addition, resale home prices will also increase. All my research says the best hedge against inflation is hard assets such as real estate, gold, silver, fine art, etcetera. You want to own things that can’t be easily printed such as US dollars. Therefore, I believe inflation will increase the price of real estate.
What will happen to Mortgage Rates in 2022?
Interest rates and mortgage rates will increase in 2022. The only question is how much and when. The Federal Reserve has stated on several occasions they plan to raise interest rates in 2022. The Federal Reserve interest rate has been near zero for quite some time. Most likely. the Federal Reserve will raise interest rates at .25% each time they raise interest rates. The big question is how many times will they raise interest rates in 2022. Many economists believe rates will be raised between 2 and 4 times in 2022.
In conclusion, increasing interest rates is not good for the real estate market and the economy. Increasing mortgage retes reduce the buying power of home buyers. Increasing mortgage rates will keep a lid on increasing home prices.
How will Covid 19 Affect Real Estate Prices in 2022?
This is a difficult question to answer. Covid 19 was one of the things that drove real estate prices higher in 2020 and 2021. Many potential home sellers chose not to sell their home as they were concerned about allowing people to enter their homes for the fear of the coronavirus. This kept inventory low and prices high. The United States is experiencing a spike in the number of coronavirus cases as of this writing. In fact the United States set an all time daily high as I am writing this article. The coronavirus does not want to go away and the vaccines are not keeping people from getting the virus.
I have to assume this virus is going to be a problem for at least 6 months or longer. Inventory of houses for sale is going to stay low as long as this virus is raging. This will also cause real estate prices to increase.
What will Happen to Albuquerque Real Estate Prices in 2022?
Most indicators are that home prices will increase in 2022. Inflation and low inventory due to the corona virus will cause home prices to increase. Additionally, increasing interest rates will keep a lid on price increases. Furthermore, I don’t think we will see home prices increase as much as we did in 2021. However, I do think we will see home prices increase between 5% to 10%.
This is just one man’s opinion. This is a tough time to look forward into the Albuquerque real estate market.
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