No matter where you live, the biggest market question is how is the housing market doing and will it crash in 2022? The simple answer is that it will not crash this year.
There we said it.
We don’t like making absolute statements but the forecast for the next 12 to 14 months clearly shows that the housing market is likely to stay robust. Last year, homeowners found themselves in a market where their houses sold quickly and often way over asking price, and most buyers ended up in bidding wars, and making offers on several properties before finding themselves the winner of said bidding war.
We are coming off a year in which the price of homes in the United States increased by 18.8%. And the market is actually even tighter now than it was last spring. Zillow has predicted that the year-over-year rate of home price growth will hit 22%. That’s historically unprecedented! By this time next year, the typical U.S. home is expected to be worth almost $400,000. This outlook prediction is driven by Zillow’s expectation that the current market conditions will persist, with demand for houses far exceeding the supply of available homes.
Most experts agree that housing demand will stay strong throughout 2022. Spring and summer will likely see an increase in listings, but it is unlikely that there will be enough inventory to meet demand. This shortage of listings has created the current trend of houses sometimes selling within hours of being listed. In fact, the average amount of time that a house is currently on the market is often than a week.
What about the impact of mortgage interest rates? Data shows that mortgage interest rates are continuing to rise, which is a challenge for some investors and buyers. Although rates are not outrageous by historical standards, they are higher than they have been in years. But even with increasing mortgage rates AND higher home prices, the housing market would remain a seller’s market due to – you guessed it – high demand and lower inventory.
Every decade since the 1950s, this country has built more than 20 million homes. From 2010-2020, around just 5 million homes were built. Toss in a pandemic, supply chain issues and a labor shortage and you get our current market situation.
The bottom line? When the demand is satisfied, prices will stabilize. The housing market is in far better shape than it was a decade ago.
If you’re wondering if now the time is to buy, you should know that there are always unforeseen variables that can alter the market. So, the best strategy is as true now as it ever has been make sure you can afford the house you buy and still have room to save up for rainy days.