2022 Housing Market Year In Review

17 housing traits that outlined the yr, together with report house 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. house worth hit a report excessive earlier than falling barely. Rising rents stretched renters’ budgets. Excessive inflation put elevated stress on nearly everybody. For the primary time in historical past, mortgage charges doubled within the span of only one yr. The record goes on

Generally, 2022 was a response to the dramatic actual property increase in 2021. The yr began with a surge in costs and development throughout the board earlier than falling alongside report 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 knowledge factors and visuals that outlined the 2022 housing market. 

All knowledge was compiled by the week ending December 23, 2022. Information is aggregated from January to November and doesn’t embrace December until 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.

1. Residence costs rose to an all-time excessive

In Might, the everyday house offered for $430,365, a report excessive since information started in 1963, shattering 2021’s excessive of $386,000. In March, the median sale worth rose 16.8% yr over yr, the most important proportion improve over the past 5 years. Following the pandemic, demand skyrocketed whereas provide remained traditionally low, inflicting a extreme housing scarcity and worth increase that continued all through 2021 and peaked halfway by means of 2022. In April and Might, 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 greater immediately than any earlier yr on report. 

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

The median sale worth 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 worth 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 probably proceed till mortgage charges fall additional. 

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

The highest ten most costly cities to purchase a house in 2022:

Information contains the yearly aggregated median sale costs out of all houses offered in every of the 50 largest metropolitan areas. Information doesn’t have in mind native median incomes and residential affordability. 

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

The median sale worth for a house in Detroit was $165,000 in 2022, up 3.3% yr over yr. Residence costs in Detroit hit $213,000 for per week in June, making it the costliest month of the yr however nonetheless practically 50% decrease than the nationwide median. Generally, year-over-year worth will increase in 2022 have been smaller throughout most main metros than in 2021, and development 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 giant metro that skilled a worth 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 contains the yearly aggregated median sale costs out of all houses offered in every of the 50 largest metropolitan areas. Information doesn’t have in mind native median incomes and residential affordability. 

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

Lease costs in 2022 have been 12.8% greater than they have been in 2021. Nationwide, the median lease worth rose to $2,053 in August earlier than dipping barely, the very best on report and a 12.3% improve 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 costliest metro for renters within the nation.
• Most 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.  
• Lease development 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 items beneath building within the U.S., which can come out there for lease over the subsequent yr, serving to to alleviate a part of the housing scarcity.

“We anticipate 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 sometimes get one of the best deal through the winter months as demand is decrease, rents are persevering with to ease. Due to this, there gained’t be as a lot of a seasonal improve come spring, and thus endurance 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 lease or free parking.”

The highest ten most costly cities for renters in 2022

The highest ten least costly cities for renters in 2022

Information contains 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 regarded to maneuver to a distinct metro through the three months ending in November. That is on par with the report excessive of 24.2% within the third quarter and up from 19.1% in 2019. 

• Homebuyers regarded to maneuver to sunny, comparatively reasonably priced areas, with Miami, Tampa, Las Vegas, and Phoenix being the most well-liked locations.
• Homebuyers regarded 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 previously yr, together with Phoenix, Las Vegas, and Sacramento.

“Just like 2021, continued development in distant work and a need for housing affordability drove relocation patterns in 2022,” Marr continues. “Nonetheless, traits 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 recognition in 2022.”

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

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

The costs of products and companies rose to six.48% yr over yr in November, the very best proportion since August 1982 and greater than double the speed from November 2021. In actual fact, 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 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 triggered mortgage charges to rise and elevated fears of a recession, protecting 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) by means of November 2022. 

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

After many years of falling mortgage charges, in 2022, charges climbed to almost 7% in each October and November, greater than any level since 2002. In actual fact, 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 beneath 7%.

• In well-liked migration metros like Phoenix, Las Vegas, and Austin, greater mortgage charges and costly house costs damage 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 finances – a 28.5% drop from 2021.

Excessive inflation and rising mortgage charges typically deter patrons, however in the event you’re capable of afford it, possession would be the higher choice. “Homeownership is a long-term funding that may result in important web value positive factors, even with charges above 6%,” advises Dean Hayes, Space Gross sales Supervisor with Bay Equity, a Redfin firm. “Mortgage charges will probably go down within the new yr, that means extra house patrons will return to the market, creating elevated competitors and fewer room for negotiation.”

8. Housing stock rose after hitting a report low

10.7 million houses have been listed on the market by means of November, up 11.2% in comparison with the 9.5 million houses listed by means of November in 2021. Within the three months ending November 2022, the variety of houses on the market elevated by 15% yr over yr, the largest improve on report. 

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.

“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 by means of this yr. Patrons now have much more selections than they did final Spring.”

Stock and provide are calculated in rolling 90-day durations, e.g., January 2022 knowledge is the three-month interval from November 1, 2021, by means 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 will 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 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. Yr over yr, 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.

“Patrons have extra leverage now than they’ve since 2010,” advises San Francisco Redfin agent Josh Felder. “Even with greater mortgage charges, in the event you intend to remain put for longer than 5 years, it’s a fantastic funding. Houses are forecast to nonetheless recognize, even in gentle of present circumstances. Sellers ought to perceive that the market remains to be transferring. Houses don’t promote in 5 days, nicely over record worth, anymore.”

Stock and provide are calculated in 90-day durations, e.g., January 2022 knowledge is the three-month interval from November 1, 2021, by means 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 means of 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 over 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. “For those who’re a purchaser, contemplate 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 typically supply incentives.”  

• Over 63% of latest builds have 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 offered by means of November, down 16.6% yr over yr, a pointy lower from the 6.74 million offered in 2021 throughout the identical interval. Generally, between 4 and 7 million houses promote per yr, with the historic common sitting at just over 5 million. Yr-over-year house gross sales decreased in each month of 2022, with October and November posting the sharpest declines. 

• Simply 376,000 houses offered 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 offered, a 15.2% year-over-year dip.

Information was collected by means of November.

12. Median days on market rose at a report 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 brought on by provide chain points, a persistent 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 financial system and layoffs within the tech sector close to the top of the yr, many patrons paused their house search on account of affordability and job safety,” notes Frank Vettesse III, a San Francisco Redfin agent. “This was considered one of many elements that contributed to the dramatic slowdown in gross sales.”

• Might 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 largest year-over-year slowdown on report.

13. 14% of energetic house listings skilled worth drops 

On common, 14% of energetic houses on the market had worth drops in 2022, up 4.7% yr over yr. In October, 22.6% of listings had worth drops, a decades-long excessive. In actual fact, from February by means of July, the variety of houses with worth drops rose from 5.7% to 19.5%, a record-fast improve. “The shift was dramatic,” says Christy Seashore, a Seattle-area Redfin agent. “The patrons who didn’t safe a house through the top of competitors at the moment are bidding low. For instance, the identical kind of house that patrons have been prepared to supply $200,000 over record worth at the moment are providing $200,000 beneath record worth.” 

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

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

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

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

14. 55% of houses had a bidding warfare

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%). 

Nonetheless, nationwide, bidding wars fell from 72% to 35% from February to November. A worsening financial system, greater 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 forward to mortgage charges to drop. “Until a house is priced $100,000 or extra beneath market worth, bidding wars are principally non-existent. Our crew nonetheless hears of some multiple-offer conditions; in these circumstances, it’s sometimes a luxurious house in a high-demand neighborhood that’s priced very aggressively.” 

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

Information contains the median proportion of bidding wars throughout energetic 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% yr over yr. In October (the newest knowledge out there), 32% of houses have been paid for with all money, up 2% yr over yr and the very best share since 2014. 

• Florida was the most well-liked 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, courting again by means of 2011. Information doesn’t embrace November or December.

16. Actual property buyers bought practically 20% of accessible listings, a brand new report

Vying to capitalize on the housing and rental increase, buyers bought 233,701 houses in 2022 by means of 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 contains all property sorts until in any other case said. Whole proportion is the common of knowledge from January-September. Information doesn’t embrace the final quarter of 2022. 

17. Luxurious house gross sales skilled their greatest year-over-year decline on report

In 2022, there have been 258,733 luxurious houses offered within the U.S., down 27% yr over yr and the largest decline since 2012. Lively listings dropped even additional, falling by 32.7% yr over yr. The median sale worth for a luxurious house was $1,080,000, up 14.8% yr over yr. Costs reached their peak of $1,120,000 through the three months ending Might, a 15.7% year-over-year improve. Nonetheless, worth development, 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 report. 
• Luxurious houses spent a median of 32 days available on the market by means of 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 largest fall of any main metro

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