Southern US Housing Market Forecast [2022]

Demand for homes was already high before the pandemic throughout the country's most desirable areas, but the health crisis caused interruptions in supply chains for building materials, locking down construction, making the situation even worse for those looking to purchase a home.

While there are signs that the stratospheric price increases may be starting to level off, part of the cause may be that prices have become so high that potential buyers have given up. Those who are relocating tend to move to traditionally less costly places like the South and Midwest.

Metro Areas That Weren't Sizzling Hot in 2021 Will Be Some of the Hottest in 2022

In southern states, metro areas that underperformed in 2021 are likely to experience higher price increases in 2022 as compared to other markets. That means if you're looking to score something more affordable, you're going to have to act quickly, buying a property where prices haven't skyrocketed yet, like Memphis and other cities that are considered more of a "hidden gem." 

For the Memphis metro area, the housing boom will be booming even more with sales projected to be above the national average while home prices are likely to increase rapidly at more than double the national growth rate. 

Others predicted to experience significantly higher prices this year, as they still have more room for growth, include the Dallas-Fort Worth area, Fayetteville, Arkansas, and in Alabama, both Huntsville and the Daphne-Fairhope-Farley metro area. 

Most Expensive Housing Markets in the South

The most expensive housing markets in the South are unlikely to surpass the significant pricing increases they did in 2021. That includes Virginia, with 20 of the 50 most expensive housing markets in the region. In October, the real estate marketing frenzy there was beginning to slow to more normal conditions as per the Virginia Realtors report.

In several Tennessee cities, home prices increased significantly in 2021. For 2022, the Nashville market is projected to see a 5.6 percent increase in prices, while Knoxville prices may rise by 5.9 percent, while Chattanooga will be especially hot, with a nearly 7 percent rise in home prices. 

Median prices in the most expensive housing markets in the South can range anywhere from $627K to $1.5 million. 

What It Will Be Like for Homesellers and Homebuyers

In 2022, homeowners ready to sell in the South are in a good position with prices continuing to rise. Even when housing inventory starts to grow, bringing more competition, homes that are in good condition and priced right will continue to sell quickly in most markets. 

The downside is having to purchase another home, which is why some homeowners are deciding to hold back. Sellers who don't need to buy immediately, such as those ready to sell vacation or other second homes, will be in the best position. 

Homebuyers looking to purchase in the South will face a competitive housing market in many areas. There are over 45 million millennials who are in their prime for buying a first-time home. More buyers mean higher home prices, and when combined with interest rates that are rising, that means higher monthly payments. And, with homes expected to sell quickly, buyers will have to act fast and bring their best offer to the table to get it accepted.

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