Are you an investor, home buyer, or seller trying to find out if the housing market will remain cool or hot in 2022? You are in the right place because we have some expert projections on the 2022 housing market. Here are some of the estate agent trends you have to watch out for. The demand and supply changed after the COVID-19 pandemic, and the market is slowly coming back to its normal state.
Further, the low mortgage rate has made many people work from home to buy homes and become homeowners. It led to a hyper-competitive market, so it made the housing market hot. But the housing market can fluctuate, so know about the 2022 trends here and whether there will be a housing market crash or not in 2022.
The housing market may not crash in 2022
We cannot say for certainty about the possibility of a housing market crash in 2022. This event is very unlikely. The population demographics, the decade-long construction of the new home, and the US economy are the factors that may stop the housing market crash. As many want a place to live and many are coming of age to buy it there will always be a demand to buy homes.
Another factor that contributes to the growth of the housing market is that the majority of homeowners have good equity in their homes.
The tighter lending requirements from the banks have increased home equity. It is a company that offers down payment assistance to people looking to buy homes. Also, the people owning homes have more equity in their homes, so the risk of oversupply due to faults is extremely low.
1. Inventory will be low
One of the major reasons that may prevent the housing market crash in 2022 is the lack of inventory. There are not enough homes available for sale in the housing market, but there has been a little increase in the last few months when compared to the older trends. But inventory may rise gradually, which is one of the expectations of the experts.
There is a shortage in the supply chain and labour. But now the low inventory will drive up housing prices. So home values will slow down in 2022, but prices will increase.
2. More millennials will buy homes
In 2022, many millennials entered the housing market to buy homes and became first-time homeowners. This rate will increase in 2022. So by buying their first homes, millennials will support the bottom of the housing market. Also, it will keep the housing market active for several years.
Millennials will be the next generation to be most active in the market, along with boomers. So the estate prices will climb as these generations will have the buying power to buy homes.
3. High housing prices
The high housing prices will be good for homeowners but bad for the home buyers because they may find it difficult to find cheap options. Many homeowners in the US got $60,000 in equity so it will be a good thing for the homeowners. Further, the home prices were up by 20% in March when compared with the previous years. But this will not end in a Housing Market Crash.
4. Borrowers will pay their mortgage
In 2008 the housing market crashed so there is always a fear of it happening again. The crash happened due to predatory lending practices, lax lending standards, and excess debt in asset markets. But after many years we can expect some good news because in 2022 the market may not crash like in 2008. Further many consumers are also aware of the risks related to mortgage debt. Also, they have less wish to buy a home.
Also read: Buying A Home? 5 Things to Do Before Investing
Will there be a Housing Bubble?
A housing bubble is a situation when there is high demand but a surplus of supply. Because of that, the homes are easily buyable via loose credit. But fortunately, in 2022 there will not be a housing bubble. We cannot deny that there is a huge demand for homes but the banking regulations after the 2008 crash will be more restrictive and it will remain that way.
The current buyers are more qualified to buy and sustain the investment which means few foreclosures. Also, the supply of homes can take years for it to return to normal levels. Therefore even if there is a selloff it will not be the first sale at discount prices. Further, the home prices may decrease soon but may not happen drastically in 2008.
There is a great increase in the new construction and purchasing of homes with the mortgage packages. Many have learned that a lesson we can learn from the 2008 market crash may not be suitable for first-time homebuyers as they were not in the market fourteen years ago.
The first young-time buyers may desire to overreach as they are seeing the home appreciation over the past 18 months. But the proper lending standards offer some guardrails to stop buyers from using toxic mortgage products to purchase homes they cannot afford. Now they are continuing to enjoy a great job market as the employment is low along with the rise in wages.
Many experts worry about the rising rates and the rising home prices. But there are also other factors because buyers can get more than they pay as they may face some issues when paying their mortgage. If this happens to a lot of people it can result in a housing bubble.
What are the signs of a market crash?
Although many people believe that we are experiencing a bubble right now or that a housing crash is imminent, there are some real signs through which we can discern if it will happen or not.
- The high price of homes can outpace affordability and inflation.
- Rising loan
- High mortgage rates
- Increase in mortgage balances
- Slow economic growth
Conclusion
If you are anxious about the probability of the Housing Market Crash in 2022 you can consider the aspects discussed above. It will help you know whether the crash will take place or not.
Also read: Is Water Damage from Rainwater Included in Your Homeowners Insurance?
