Real Estate Market Forecast 2022: When Will Prices Fall?

Home prices continue to skyrocket, despite rising mortgage rates and an increase in housing supply, which is usually a factor leading to lower home prices. Still, the numbers show that the market is fairly steady and expensive.

Realtor.com reported that the national average price of single-family homes in June was $450,000, up 16.9 percent from the same period last year and 31 percent more than in June 2020. As home values approached $500,000, buyers began to pull out of the market. According to the Mortgage Bankers Association (MBA), mortgage applications fell to their lowest in late June, the biggest drop in 22 years.

The current changes in the housing market are due in part to general economic and consumer sentiment. And the economy is currently in a state of change. On the other hand, the economy is showing signs of weakening as gross domestic product declined for the second quarter in a row, which some economists believe is indicative of a recession. But on the other hand, the labor market and consumer spending are still strong.

Although the MBA did not include a recession in its baseline forecast, it estimates that the U.S. will enter a recession in the next 12 months by about 50 percent, and says it is a “recession for now.”

Housing Market Forecast for August 2022

Many housing officials warn buyers not to try to time the market as the economy is going through this uncertain period.

“Whether to buy now or wait will depend on the motivations and circumstances of the individual buyer. Waiting may not be a viable option,” says Krista Forsberg, a Keller Williams real estate agent in Edina, Minnesota. “Even if a buyer is able to postpone suspending a purchase at the end of the year or in 2023, the price or interest rate won’t improve significantly.”

Housing experts say they’re being polite to an economy that’s suffering from inflation, soaring oil prices, the war in Ukraine and the Crown everywhere. Housing has been the star of the U.S. economy for the past several years, but there are signs of wear and tear, such as rising interest rates that are making it difficult for buyers to access affordable housing.

“The steep rise in interest rates is scaring buyers and sellers alike,” he said. – “They don’t know whether interest rates will continue to rise or not. This lack of predictability is causing many buyers and sellers to just sit and wait,” said Steve Simmons, founder of October Real Estate in Los Angeles. “But others will go ahead and sell or buy before things get worse.”

According to the National Association of Brokers (NAR), sales of existing homes fell 5.4 percent in May and June, marking the fifth consecutive month of declining sales. Nevertheless, the average sales price of these homes reached a record high of $416,000 in June, up 13.4 percent from a year ago. All this suggests that home prices aren’t going down anytime soon.

Will the price of the house continue to rise?

Inflation, high mortgage interest rates and record home prices are making home purchases less likely. According to a Zillow report, typical monthly mortgage payments are 75% higher than they were in June 2019. And incomes haven’t kept up with inflated expenses. Wages rose 6.7% in June, leading to a 9.1% increase in prices.

MBA economists don’t expect home prices to fall in the near future. They announced an average sales price of $361,400 for existing homes in the first quarter, which they expected to rise to $402,000 in the second quarter and then fall slightly to $379,000 in the third quarter.

Housing Forecast for 2022

According to some economists, home prices may rise, but options will also expand.

Realtor.com The inventory forecast showed a dramatic change from the beginning of the year, from an increase of just 0.3 percent to a 15 percent increase in the current inventory of homes for sale.

Realtor.According to the com report, “While home prices remain high as homebuyers are forced to make tough choices about their budget priorities, the number of homes for pre-sale is expected to continue to increase after the increase that began in May.”

“As more homeowners adjust to changing personal needs and try to take advantage of favorable market conditions to obtain the significant amount of capital they may have accumulated, homebuyers will have more options.”

Should I buy a house now or should I wait?

Buying a home in any market is a purely personal decision. Since a home represents the largest one-time purchase most people can make in a lifetime, it is important to be in a sound financial position before you start.

Use a mortgage calculator to find out how much a home costs per month based on a down payment and interest rates.

Timing the market or predicting what will happen next year is not a good home-buying strategy. Instead, it’s better to buy on budget and need. If you find a home you like, in a neighborhood you like, and it fits your budget, it may be right for you. However, if you sacrifice too much to save your home, you may face buyer’s remorse and costly repairs.

Tips for buying in the Hot Home Market

Start with a budget and make a contract with yourself to stick to it. Despite a slight increase in the number of homes ready for sale, buyers are still facing high prices at 6 percent and mortgage rates.

“There are a lot of factors that go into buying right now, and frankly, a lot of people are afraid to make a mistake,” says Jennifer Baftista, a real estate agent at Freshstarts Registry in Andover, Massachusetts. “As an experienced agent, I ask my clients first: ‘What does your intuition say? If you feel like [the timing is] wrong, you’ll always find the wrong house, so wait.”

Rachel Luna, director of Patriot Title in Houston, also advises buyers to slow down. The scarcity mentality in the market forces people to make quick decisions that can quickly turn into a buyer’s appointment.

The problem is that if you find you’ve paid too much money or bought a place you don’t like, you can’t get your house back. The pre-sale cost can be as much as 10% of the pre-sale price of the house, so if you turn around and sell it, you could lose out.

“Be patient.” says Luna. “Personal finances and long-term economic stability are really important when buying a house. Ask. Are there no debts? Do you have an emergency fund for expenses for three to six months? Will your monthly rent be less than 25% of your monthly rent? If these conditions are not met, he says, it doesn’t matter if the market is favorable.

Tips for Selling in the Hot Home Market

The first step to a successful sale is finding a registered dealer who knows the area well and gets many recommendations. A good broker will work closely with you to price your home competitively, taking questions and offers from potential buyers.

In the meantime, show your home in as bright a light as possible. Not everyone has money set aside for repairs and remodeling, but a little sweat equity can be a big help. The first step is to clean, clean and clean.

Put away piles of bills and receipts, store toys and keep the kitchen clean. Bright lighting is also a great way to make your home look spacious and bright.

Even if your home is old, a clean space gives buyers a chance to imagine the potential of a new home.