On April 21, 2022, Zillow Research released a housing market trends with a prediction of US home prices to rise 14.9% in the period from March 2022 to March 2023. This signifies a decrease of 2.9% from the previous month when Zillow predicted a spike in home prices of 17.8% for the coming year.
Now, real estate researchers are lowering their housing market trends on home prices. Check out Virginia Beach Market Index.
According to the Zillow report, the downwardly revised forecast is the fast strengthening of affordability headwinds, faster than anticipated because of the steep rising interest rates; the continuing record lows in the inventory of housing supply although, as the report continued, there is a potential of faster recovery which could then lower home prices in the future and projections on sales volume.
Will It Crash or Explode
There are a number of reasons why a crash in the housing market trends will not happen in the next few years. Many housing experts say that the current housing market trend is very different from 2008-2010, the period called the last big housing bubble. A housing bubble is an occurrence wherein there is rapid home price growth because of increasing demand, limited supply, and emotional buying.
And the demand is driven further when speculators note the rising housing market prices and they soon enter it. Now, the experts say that’s not going to happen anytime soon, citing some changes which would prevent that from reoccurring.
Current mortgage reports show that Mortgage Bankers Association rules for lending are now stricter than before, to prevent non-payment or defaults in monthly payments by risky subprime mortgages. A subprime mortgage is one that is normally issued to a borrower with low credit ratings.
Availability of supply in the housing markets is still at a great low to meet buyer demand, at which home price growth is not seen to rise in a few years, thus the perilous uncertainty of house prices dropping heavily.
Further Explanation: Housing market trend
The further explanation goes like this. In a real estate situation of a high number of active listings, i.e., existing homes for sale where the number of willing home buyers or the high demand would suddenly take a nosedive, there would be a home price drop and even the median home price of all housing types. That would be a worrying 2022 housing market crash possibility.
However — for as long as buyer traffic is high, buyers continue coming into the real estate market and there is still a low inventory of new houses, there are not enough houses under new construction to cope with the demands of a bidding war, then home sales and the asking price of housing costs will not go to a slower rate but will continue rising and thus, the real estate market remains healthy.
Housing Market Forecasts for 2022
A few weeks ago, the Mortgage Bankers Association, a national association of lenders issued a prediction of a 2022 decrease from 35.5% to 2021, i.e., $2.58 trillion total. Mortgage origination is the process when a borrower files an application to get a home loan, including all the stages until the borrower gets the keys to the house.
That is quite a considerable decrease but even if the prediction of a total sum of originations would become $2.58 trillion, that figure is still higher than the 2019 figures.
Will Housing Stocks Rebound?
2022 could see a possible rebound in housing inventory. A probable scenario would be a peak of the stock from late summer to around early fall, from the 2021 experience of the market returning to normal seasonal trends.
House hunting in 2022 is quite a daunting endeavor, as the last 18 months showed a significant shortage of homes for home sales. Most buyers often would come across a listing fitting their needs and end up finding their offer buried by competitive bids, embroiled in possible bidding wars.
But from past years’ experience, the experts look at the normalization of inventory by summer’s end. Plus the significant mortgage rate growth is seen as a possible factor to get back the seasonality in the 2022 housing market. So they are looking at a slight projection in listings by summer or early in the fall months.
Will There Be Lots of Foreclosures in 2022?
The foreclosure rate in the country reached lower than pre-pandemic levels. There were no foreclosures because the government had banned them, temporarily, for the most part of 2021. The ban was lifted before year’s end and foreclosure filings rose by 24% in September compared to prior to the ban’s lifting, and 102% compared to the previous year.
More foreclosures are anticipated to occur in 2022 while mortgage institutions get back to their “normal” work, even if these foreclosures will still be less than in the “normal” housing market.
What will this augur for buyers and homeowners?
Homeowners who have lost stable income sources will find this situation tough with the inability to sustain payments amidst rising mortgage rates. They could avert foreclosure on their property by getting several simultaneous jobs and doing a lot of budget tightening.
Homebuyers face possible discounts on their home purchase. But, a foreclosed property comes with issues, though. If this is you, exercise due diligence to know what you will be getting into before you even give an offer to buy.
Will Buyers’ Demand for Housing Remain Strong?
The experts in the real estate market say that 2022 will see a continuing strong buyer demand. In the time period going towards 2022, homes for sale obtained 3,8 offers to buy, on average. This was an increase of an average of 3.5 offers in late 2020.
All over the country real estate agents were enthusing over their markets, as to the number of home buyers searching for homes to buy, there’s just so much!
Will Housing Prices Fall in 2022?
Zillow’s prediction is a home price appreciation of 14.9% in the coming 12 months and its realization would be an indication of another strong year historically significant in home price growth. Home price increases and rising rates in the past 12 months were at an amazing 19.2%! These numbers are exceptions to the annual home average rate of 4.6% in the country since 1987.
According to CoreLogic, the soaring mortgage rates still do not indicate a decline in price growth for 2022 because there is still an inconsistency between housing supply and strong homebuyer demand, which is reflected in its national forecast as of April. (CoreLogic is a California-based provider of financial, property and consumer information, analytics and business intelligence).
Will Housing Inventory Remain Low?
Predictions from economists say it will. We won’t be seeing a buyer’s market anytime soon. Active listings at the end of 2021 saw a drop by almost 180,000 houses and inventory fell to almost 27% compared to the same period in 2020.
Most of the markets show slow seller traffic, i.e., low inventory, which means that buyers will need to wait for more time or put in more effort to find their dream home. For additional read, check out Real Estate Investing in Virginia Beach.
What Does This Mean for Homebuyers in 2022?
Home buyers are still in some bind before getting to buy their dream home in 2022. The year is still a seller’s market, thus with more buyers than sellers, meeting stiff competition, low buyer affordability and high prices in the housing market trends, even the possibility of encountering a bidding war.
Moreover, the issue of sufficient inventory still exists, because despite an increase of almost seven months-worth in the fall of last year, it wasn’t sustained. As the year ended, the inventory fell to a mere 1.8-month supply. Home builders may be confident of active business in 2022 but that won’t mean easier access to a newly-constructed home.
There is the situation of supply insufficiencies, government duties and taxes, and rising prices, for homebuilders to contend with, all adding up to making the construction of enough houses to meet demand a difficulty.
Thus, for a homebuyer, it means that if you really want to get your hands on that house you wish for, you would have to do some (at the very least) compromising on your “wants.”
What Does This Mean for Home Sellers in 2022?
Many sellers feel like selling, putting their homes on the market in 2022, while there is still a shortage in inventory. The housing market trends must not be the decisive factor, though. If you make the decision to sell in 2022, you could be facing more competition because of the lifting of the foreclosure ban and higher home prices. But there are still more buyers than available houses.
It would be to your benefit to get an experienced agent to help you use the home prices to your advantage through multiple offers and get to find the right buyer. The agent’s expertise will make selling your house this year at a great price much easier.
How to Cope with the Real Estate Market Ups-and-Downs with Confidence
The housing market trends are not easy to predict and the reason why you need a professional real estate agent who has the expertise and whom you trust to work with you. Either as a buyer or seller, an experienced agent can take you through the processes of your housing transaction with the least headache and hassle possible. Get in touch with real estate agents in Virginia Beach, Barry Jenkins – Better Homes & Gardens Real Estate | Real Estate Agents in Virginia Beach, VA to set a meeting.
Barry Jenkins is the one you can trust to get you your housing goals, guide and advise you through all the processes in the transaction, from your mortgage eligibility or referring you to mortgage experts and helping you navigate higher prices or higher interest rates.
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