House Market Predictions 2022: Will The Housing Market Crash?

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If you are currently reading this resource on house market predictions for 2022, it can be safely stated that you are strongly considering buying a house!

If that is the case, we can understand that you might have a ton of questions relating to whether the house market crashed, mortgage interest rates, and so on.

Thankfully, you have come to the right place. We can understand that buying a house is probably the biggest investment (or asset to own) for 90% of the population.

It is not only a financial decision but also one where a ton of emotional investments are involved. Whether it be home sales or getting in touch with real estate agents, everything can become an overwhelming experience.

In this resource on house market predictions, we will try to cover the following important topics-

  • Will the House Market Crash: what experts are saying
  • More Supply than Demand will cool down house prices
  • Reasons why Home prices will not come down anytime in 2022
  • Probable reasons that might drive down house prices and cause a crash
  • The Bottom Line

If you or someone you know is currently looking at buying a house in 2022, this article can prove to be an invaluable asset for them.

House Market Predictions: Will the House Market Crash in 2022?

You do not need to be a Wall Street financial analyst or Real Estate Guru to notice that the average price of homes is steadily rising over the last few years.

Every year, buyers that do not have unlimited resources want to fulfill the American dream of owning a house. They wait and check whether economic cycles will create a situation where property prices will drop or not.

So, what are our pundits saying on the matter? Will the housing market crash and allow for more affordable home sales and buying experience?


Quite the contrary.

Experts are of the opinion that rather than a crash, you can expect property prices to rise significantly in 2022. The pandemic had sort of slowed that down. With the same entering the endemic stage, there is going to be a lot of demand for residential real estate.

According to Zillow, 2022 is going to witness the highest growth in terms of the prices of homes. Zillow itself revised its predictions for home sales. It now thinks that according to house market predictions, the average home rate is going to rise by a staggering 22%.

This means that normal individuals and families that were expecting a home crash like 2008-09, should give up hopes for the same.

Experts unanimously agree that as far as house market predictions for 2022 are concerned, there isn’t going to be a house market crash!

Supply-Demand and the Real Estate Market: Will the Real Estate Bubble End?

For a very long time, there was talk that the prices of homes had been artificially inflated.

A lot of buyers as well as real estate agents were of the opinion that an artificial scarcity was being created that was leading to inflated prices.

Just like any other economic rule, principle, or philosophy, the real estate market is also driven by the Supply and Demand conundrum.

Let us try to break this down into real numbers and assess what is really happening.

Rising prices in the housing market are directly correlated to the low inventory of homes. In other words, there are more interested buyers with money on their hands than there are homes that are available on the market to be sold.

Leading real estate agents from the National Association of Realtors point out that in the whole of the United States, there are just 870,000 properties for sale.

Now compare the same with the kind of buyers looking aggressively on buying property. Their numbers stand in the millions.

The scarcity has not been created artificially, but reflects a demographic that is disproportionately higher than the number of homes available for sale!

5 Reasons Why Home Prices Are Not Going to Come Down in 2022

In this section on house market predictions, we are going to list down five major reasons why there isn’t going to be a house market crash in 2022-

  1. Millennials want to buy their first home in 2022

According to several demographic studies, the millennial population is going to turn 33 this year. In the US, this is the average age when individuals buy their first property. The aggressive lot is not going to wait for the property prices to cool down. They want to buy their first homes and get on with starting their families.

  1. Rising mortgage rates have defied house buying trends

When the Federal Reserve increased interest rates in an attempt to check inflation, everyone expected that property prices will start cooling off. What happened was quite the contrary. Everyone was scared that there will a further rate in the future and rushed to get home loans on the already high-interest rates. This pushed up the demand even further in the real estate market.

  1. There is a lack of inventory in the real estate market in 2022

Quite simply, there aren’t enough homes as there are buyers in the market as far as 2022 is concerned. New constructions or extended cityscapes are not able to attract home buyers. While other areas of the economy are seeing the effects of the Russian War and Gas Prices, the real estate market is quite isolated and indifferent to such global effects.

  1. Wall Street is buying real estate by the droves

Not only are home buyers competing against one another in terms of homes, but they are also competing with Wall Street for their properties. Yes, you heard it right. Wall Street investment firms with their unlimited purses are making a beeline for real estate as they look to stabilize their portfolios and move away from commodities like gas and fuel.

  1. New homes are not coming up as fast as expected to ease the supply

There is no doubt that construction companies are doubling down on new homes. Construction is taking place at breakneck speeds. However, even though the pace has been picked up, it is failing to satiate the immediate hunger and demand for homes as has been demanded by millennials. It will still take at least two to three years to help level this off.

Factors that can Drive Down Property Prices in the United States in 2022

You know what they say- never say never.

We believe the same and this is why we have tried to list down some factors that experts and we feel alike can drive down property prices in the US in 2022.

Let us look at them right now

  • Firstly, if the war in Europe between Russia and Ukraine blows up, then it can impact economic conditions, including mortgage interest rates and the Federal Reserve’s response.
  • Secondly, the Pandemic continues to be a major player. People that had thought of selling their homes and waited for the worst of the pandemic to be over might enter the market and start selling their homes.
  • Thirdly, if inflation continues unabated, the Federal Reserve might push mortgage interest rates above the 5% mark. This is sure to dampen the home buying spirits of millennials who will then be wary of such a high-interest rate.
  • Fourthly, if there are any further social and civil unrests in any part of the country, there will be disturbances and people would want to leave. There is a faint chance of this happening, you don’t know how international and domestic events play out.

You need to understand that there is a very faint chance of all the above things happening. The only thing that enjoys a high probability is that the Federal Reserve will increase the mortgage interest rates beyond the 5% mark.

The Bottom Line: House Market Predictions for 2022

In 2021, house prices rose in double digits. While Zillow thinks that this will reach a crescendo of over 21% in 2022, there are experts (financial analysts and real estate agents) that think otherwise.

They point out that there will be a rise, but it will be close to single-digit levels. In other words, 2022 is not going to be like 2021. You can expect house sales and prices to rise in single digits only. This is attributed to two main factors- higher rates of mortgage and new homes.

Towards the end of the year, nearly a million homes are expected to be added to the market. the Federal Reserve will do everything to bring down inflation.

There is no right time to buy a property. To be honest, there are just too many uncertainties and variables that you need to take into consideration.

If you are financially in a position to buy a house in 2022, you should go ahead if you plan on living there for the coming years and have a stable source of income.