From coast-to-coast, the house market is red-hot and only getting hotter. It’s the result of a perfect storm of recession-induced low mortgage rates, the increase in work-from-home arrangements allowing consumers to spread further from their place of business, and a wave of first-time millennial homebuyers competing for a limited housing inventory.
But, how long can this trend last?
If you look at housing market predictions, it can be difficult to find consensus. Should homeowners stay put, secure in the knowledge that their property can only appreciate in value? Or is now the time to cash in by downsizing?
So to cut through the noise, let’s take a closer look at these predictions and what forces are driving the current housing market.
Conflicting Housing Market Predictions
Between Aug. 2020 and Aug. 2021, home price appreciation saw a spike of 19.9%. That’s an impressive figure, but one that cannot be sustained indefinitely.
There’s no such thing as infinite growth, so what comes up must come down eventually. And by some accounts, there are already signs that the housing market is beginning to cool off.
Homebuyers are starting to push back against rising prices. In April, 74.5% of housing sales involved a bidding war between two or more parties. As of October, that number had fallen to 60.3%.
Meanwhile, with surging inflation becoming a major concern, the odds of the Federal Reserve raising rates to try and get it under control are high. However, experts are not in agreement as to how this will impact housing market growth.
A market prediction by Zillow sees home prices rising by 13.6% over the next year.
Goldman Sachs saw home prices rising even more dramatically. They attribute their prediction to the ongoing housing shortage, speculating that it will continue to push prices upward at least through next December. Per their 2022 housing marker prediction, Goldman Sachs expects housing prices to rise a further 16%.
Is a Housing Market Crash on the Horizon?
Not all predictions are so favorable to rising prices, however. One analyst put forth their opinion that the housing shortage is overstated. They further caution that if left unchecked, a surge in housing construction could leave the market glutted, causing values to plummet much faster than they otherwise would.
However, most analysts agree that it’s probably alarmist to say that a housing crash is on the horizon.
For one, the specific set of circumstances that triggered the 2008 crash are not present. And for another, the economy has made a remarkable recovery since the beginning of the pandemic, with 100% of the jobs lost during the downturn expected to return by the end of 2022.
This economic boom should bolster the market enough that even in a worst-case scenario a full-on housing crash is unlikely.
What the Home Market Means for You
“Tis easy to see, hard to foresee,” Ben Franklin quipped.
Experts do great work formulating housing market predictions, but there are always unknown variables. No one predicted a once-in-a-century pandemic, for example, or the effects it would have on the market.
Hence why it’s prudent to keep your options open so you can react to shifting market conditions.
Creekmore Realty Group has the experience to find the right housing solution for you. Chris Creekmore specializes in senior real estate and can help you decide if aging in place or making a move is the right choice for your lifestyle.