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Housing Market Predictions 2022: Will It Crash or Boom?

So, you’re thinking pretty hard about buying or selling a home sometime soon and want to know how the housing market is going to look. Well, housing market predictions are about as reliable as a weather forecast—no one can predict what’s going to happen with 100% accuracy. But we can check out what real estate experts are saying and make some guesses about the future from there.

Remember, a housing market forecast can only give you an idea of what to expect if you buy or sell a house in the coming months. But never let them control your housing decisions—only your personal situation and finances should do that.

With that said, let’s take a closer look at how the market is doing.

Housing Market Predictions for 2022

The housing market in 2021 exploded like fireworks—and many of those sparks may continue flying in 2022. Experts are still seeing a post-pandemic rebound—we’re talking steady mortgage rates, job recoveries, and the law of supply and demand all working together to make home sales go kaboom! There’s high demand with low inventory, but buyers are still rearing and ready to enter the market.

Here’s an overview of what experts are predicting will happen in the housing market throughout 2021 and 2022:

Housing Market Stats 2021 Annual Predictions 2022 Annual Predictions
Home sales 6.8 million 6.8 million
Home prices Up 16.9% Up 7%
Mortgage rates (30-year fixed) At 3% At 3.52

Keep in mind, these numbers will probably keep changing here and there as experts crunch new data. But the bottom line is: Home sales will probably stay mostly the same and home prices will likely continue to rise (maybe at a slower pace) in 2022 compared to 2021.

To help you put those stats into dollar signs, the median home cost rose to almost $353,00 in September 2021—that’s more than a $41,000 jump in price compared to September 2020!3

Okay, now that we’ve covered a housing market forecast at the national level, let’s dig deeper into the buyer and seller behaviors of each state.

Buyer Demand for Housing Will Remain Strong

Real estate agents across the country were asked to describe their market based on how many buyers were looking and how many sellers were selling. Check out the map to see how hot the buyer traffic looks in your neck of the woods:

housing market forecast 2022

Realtors say buyer demand is still pretty darn strong—but isn’t going up at a crazy rapid rate. In September 2020, homes received an average of 3.4 offers, but as of September 2021, they sold with an average of 3.7 offers (not exactly mind-blowing).4 Anyways, it looks like buyer traffic is remaining moderately strong throughout most of the country, which is a great sign for sellers.

Housing Inventory Will Still Be Low (Mostly)

On the other hand, the number of homes actively listed for sale is down 22% compared to last year.5 The next map shows how the majority of markets are looking somewhat slow when it comes to seller traffic—so buyers will have to work harder (or wait a little while) to find their dream home.

housing market forecast 2022

How Fast Will Homes Fly off the Market in 2022?

There are a good chance homes will continue to get snatched up fast in 2022. In September 2020, homes were typically on the market for 21 days—and we’re now seeing homes go even faster, typically selling within 17 days on the market.6

Now, this is great news for sellers who are itching to get their homes sold fast. But buyers need to stay focused! You don’t want to drag your feet once you find the best home because it’ll likely be gone if you wait too long to commit. That’s why you’ve got to know exactly what to look for in a home and what you can afford before you jump in the game.

Of course, every market is a little different. Here’s a state-by-state breakdown so you can see about how many days existing homes stayed on the market in your area:

housing market forecast 2022

Will There Be a Lot of Foreclosures in 2022?

While the nation is experiencing a huge jump in foreclosure activity (evictions for missing mortgage payments), it’s actually a way lower amount than pre-pandemic levels.

Foreclosures started rapidly increasing toward the end of 2021 around the time the government’s temporary ban on foreclosures was lifted. In September 2021, foreclosure filings were up 24% compared to the previous month—and up 102% compared to September 2020!7

But foreclosures are still way down (70% lower!) compared to pre-pandemic levels.8 So, while it’s likely that plenty of foreclosures will happen in 2022, that amount will probably continue to be way lower than that of a normal housing market.

Here’s what all this foreclosure stuff means for homeowners and buyers:

  • Homeowners: With the end of the government’s ban on foreclosures, it’ll be tough for any homeowner who lost a stable job and income to keep up with mortgage payments. If that’s you, hang in there! There’s more you can do to avoid foreclosure, like tightening up your monthly budget and finding multiple jobs.
  • Homebuyers: More foreclosures mean you might find a sweet discount! But keep in mind, buying a foreclosed home could come with its own set of potential issues. So make sure you do your homework on the house and know what you’re getting yourself into before you buy.

Will the Housing Market Crash in 2022?

It’s pretty unlikely that the housing market will crash in the next few years. Experts say the current market is way different than how it was around 2008–2010—the last big housing bubble. Here’s why:

  • Mortgage providers now have stricter lending rules to help prevent defaults caused by risky subprime mortgages.
  • Housing supply is still super low and probably won’t catch up for a few years—so there’s really no danger of home prices dropping like a rock.9

Here’s the deal: As long as new buyers continue to enter the market and there aren’t enough homes for sale to meet demand, home sales and prices will continue going up, and the market should stay healthy.

On the other hand, if the number of houses for sale was crazy high and the number of buyers willing to buy them suddenly plummeted, housing market prices would get slashed—and that’s when a crash would be something to worry about.

Will Housing Market Prices Go Down in 2022?

It’s unlikely that home prices will go down any time soon—especially not in 2022. Some experts think home prices will grow at a slower rate (7%) than we’ve been seeing.10  But others think growth will continue at around the same pace as 2021 (16%).11 And others think prices could grow even faster!

Here’s a look at what home price growth could look like per quarter in 2022, according to Freddie Mac:

2022 Home Price Growth Predictions
Q1 2.1%
Q2 2%
Q3 2%
Q4 0.8%12

It’s really hard to predict home prices. So whatever you do, keep saving for a big down payment if you want confidence when entering the housing market.

Is 2022 a Good Year to Buy a Home?

The year 2022 could be a great year to buy a house—if you’re ready. It could also be a horrible time to buy—if you’re not ready. Remember, don’t let what’s happening with the housing market make your decisions for you.

What really matters when buying a house is your personal finances and season of life. No matter what’s happening in the market, you’re only ready to buy a house if you meet these qualifications:

  • You’re debt-free
  • You have an emergency fund
  • Your monthly house payment won’t be more than 25% of your monthly take-home pay
  • You have a 10–20% down payment
  • You’re prepared for closing costs

If you don’t meet these qualifications, it doesn’t matter if the market is in your favor—buying a home right now would create a burden. Take time and get in a better financial position so you can buy a house the right way.

What Does This Mean for Home Buyers in 2022?

Okay, it looks like you’ll still need to bring your A game if you want to buy the home of your dreams in this market. With more buyers than sellers, you’ll probably be up against some heavy competition, high housing market prices, and you might even have to gear up for a bidding war. But don’t worry—there’s a bright side for buyers too.

If you’re getting a mortgage, interest rates are still looking as good as a blue snow cone on a hot summer day. In 2021, the average interest rate for a 15-year, fixed-rate mortgage continued to be historically low—at 2.15–2.39%.13 But they’re slowly inching up and will likely keep increasing in 2022.

Still, you’ll probably have a good chance of locking in a lower-than-average mortgage rate. And for the record, lower rates are a good thing because they mean a lower monthly payment and less of your money going toward interest over the life of the loan. Woo-hoo!

Another bright side: Signs are showing that the low inventory issue is improving! Homes available for sale have slowly but surely crept back up each month.

In September 2020, inventory was at a less than four-month supply—but by September 2021, inventory increased to a nearly six-month supply.14 Many experts forecast inventory to keep climbing (ever so slowly) in 2022.15 That means balance in the market is on the horizon and at least a little less competition for your dream home.

What Does This Mean for Home Sellers in 2022?

Sellers out there can feel pretty good about selling their homes in 2022. If that’s you, you might want to put your house on the market sooner rather than later while inventory is still low. There are plenty of buyers out there, but with the end of the ban on foreclosures and with homebuilders increasing production, you may have a little more competition in 2022.16

If you work with an experienced agent, you’ll be able to capitalize on home prices, navigate multiple offers, and find the right buyer. With an expert by your side, you should have no problem selling your house at a great price this year.

How to Buy or Sell With Confidence in Any Housing Market

The housing market isn’t known for being simple to predict. That’s why it pays to have a trusted professional in your corner. To connect with an agent who has weathered the storms of real estate, try our Endorsed Local Providers (ELP) program. ELPs have earned our seal of approval as RamseyTrusted pros. We only recommend top-notch agents who help you crush your housing goals—no matter what the market is doing.

Source: ramseysolutions.com ~ Image: Canva Pro

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