Will home prices drop in 2022?
The price of homes has risen significantly over the past few years. Many hopeful buyers, especially those on tighter budgets, are eager to learn if and when home prices may become more affordable.
The consensus from experts? Don’t hold your breath.
Among the six real estate experts we interviewed, none expect prices to fall in 2022. And they caution that those who are in a place to buy should do so sooner rather than later, as prices and rates could continue to rise.
Sky-high housing demand isn’t going anywhere
Many home shoppers and homeowners worry that prices have been artificially inflated over the past couple years. But rising prices have largely been driven by a supply-demand imbalance. And that dynamic isn’t going away any time soon.
“Head and shoulders above the rest is the factor of low inventory, which is here to stay for a while,” says Tabitha Mazzara, director of operations for MBANC.
According to the National Association of Realtors, there were just 870,000 homes on the market in February, with millions of shoppers vying for these properties.
“We are currently in a massive demographic wave. More millennials, the largest demographic in history, will turn 33 this year — the peak age when most buyers purchase their first home,” Bruce Ailion, a Realtor and real estate attorney, explains. “This cohort wants to start establishing households and own their first homes.”
Rising rates aren’t cooling the market as some expected
Nadia Evangelou, senior economist for the National Association of Realtors, says her organization expected to see decreased demand during the winter months due to seasonality trends in the housing market.
“However, demand remained very strong as many homebuyers rushed to benefit from low mortgage rates in the winter,” she says. “Recently, mortgage rates have increased, and the persistent imbalance between demand and supply has pushed up home prices.”
Rising mortgages would suggest that demand might cool. But the market has observed the opposite.
The rise in mortgage interest rates over the past few weeks would suggest that demand for homes might cool and home prices might drop due to the higher cost of financing. But the market has actually observed the opposite.
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