From running out of inventory to bidding wars, homebuyers in the City of Firsts have seen it all when it comes to real estate over the last two years.

2021 was a transitional year as shifting buyer priorities turned the norms in the Boston real estate market upside down. Home prices hit record highs as scores of first-time buyers and veteran buyers competed for a dwindling supply of available listings.

But buyers can approach their search with confidence in the new year as there are several positive trends impacting home buying.

To help locals turn the trends in their favor, the Prevu Real Estate team brainstormed what trends will drive the Boston real estate market in 2022.

Mortgage rates are expected to rise

Low mortgage interest rates are a double-edged sword and have contributed to market competition in recent years.

Lower borrowing costs seen in 2020 and 2021 allowed Bostonians to take their first steps up the real estate ownership ladder. It also allowed existing homeowners to sell their homes at higher prices. But lower borrowing costs created a lopsided market in which buyers were swamped with cheap financing.

As economic activity and employment levels have improved following the influx of Covid disruptions in recent years, monetary stimulus provided by the Federal Reserve is widely expected to be scaled back as policymakers’ attention shifts to rising inflation. The Federal Reserve has already begun tapering its mortgage-backed securities purchases program and is expected to start raising rates in mid-2022.

These changes in monetary policy will prompt banks to raise mortgage rates in unison.

Selling price growth expected to slow

Rising interest rates will also change the home buying landscape in 2022. Higher interest rates mean higher monthly mortgage payments, but they’re also likely to herald a return to more balanced supply-demand dynamics and slower home price increases.

Competition will ease as some buyers are pushed out of the market as higher mortgage rates lose their purchasing power. Less competition will reduce the number of bidding wars and attract new seller inventory from homeowners who have held back from selling for fear of fighting to buy their next home.

Overall, the prospect of less competition and better inventories is good news for weary homebuyers, as it’s likely to curb the rapid price increases they’re chasing.

Buyer discounts are the focus in 2022

Previously, when prices were skyrocketing in the Boston area, homebuyers were looking for ways to stay competitive without having used up all of their hard-earned savings.

Savvy buyers discovered a way to make their home purchase more affordable despite rising home prices. By partnering with a real estate agent who offers a commission discount, buyers could feel more comfortable placing higher bids knowing they will get money back after closing.

Traditional buyers’ agents collect half of the agent’s fee when a sale is completed. But the modern agents at Prevu Real Estate offer new homeowners significant savings in the form of a cashback commission rebate.

These discounts give Bostonians an edge over other buyers and can be as much as 2% of a home’s purchase price.

Normal seasonal buying behavior should return

In recent years, homebuyers have felt more like a marathon of bidding wars than the historical pattern of seasonal sprints.

With the expected return to greater normalcy in housing markets in 2022, many experts believe seasonality will also return. Shoppers are likely to witness an improvement in inventories with the start of a more classic spring shopping season.

Desire for shorter commutes again

As the pandemic caused homeowners to reconsider the cramped space in their North End apartments, people retreated to the suburbs and beyond. Some buyers looked to communities like Salem or Cohasset, while others happily bought properties in Framingham or Sharon.

But as the world continues its path to normality and offices fill up again, many buyers are trying to make compromises between proximity to the city and size of the property. For some, this means a renewed search for more spacious downtown Boston condos. While for others this means targeting suburbs with short commutes.

Interested in buying a home in the Boston area? Browse the offers and see how much you can save with Prevu’s commission discount.