The 5 Most Googled Questions about the 2022 Real Estate Market
1. Is the housing market going to crash?
I don’t think the housing market is going to crash. At least not this year. What we have right now is a housing market where there is a ton of demand and very limited supply. In Northern Kentucky, supply is more than 18% lower than it was last year, but there’s just as much demand. So when you have more buyers than there are homes, the only thing that can happen is that the price of homes goes up and people start competing for homes. So that’s why the housing market feels so unbalanced right now, but it doesn’t mean the market is going to crash because people still have plenty of equity in their homes. And the true value of a home is actually going up because more people want homes than there are homes for sale.
2. When will the housing market crash?
The housing market could get out of hand if a disproportionate number of people start speculating on homes, if they start expecting that home prices will always go up and they start buying homes just to sell them, then that can be a real problem and lead to a housing bubble, which could lead to a crash. There has been an increase in investor activity, in the Greater Cincinnati area, investors represent about 15% of the market. If investor activity starts to really surge and people are just buying homes to speculate on them, then that could be a warning sign the housing market could crash.
3. Why is the housing market so high right now?
Prices are high because demand is outpacing supply. On the supply side, the reason that supply is so low is because we just haven’t built enough homes for everybody who wants them. 72 million millennials are the biggest generation. They’re moving out of their parents’ homes and starting their own households. And unfortunately, we didn’t really build enough homes in the last decade. There were fewer homes built in the 2010s than any decade going back to the 1960s, so there’s all this demand coming from millennials and really no supply, or not enough supply.
4. Is the housing market slowing down?
The market appears to be slowing down with regard to price growth It’s not as high as it was back in 2020 when it was peaking. And that’s because mortgage rates are going up. Mortgage rates, when they go up, make borrowing to buy a home more expensive and that can cause demand to cool down a bit. We haven’t seen demand cool down enough for prices to start slowing down because there are still so many people out there who want a home and there are not enough homes for sale.
5. When will the housing market get better?
From a seller’s perspective today, I’m not sure it could get any better. As a buyer, less competition would make it better. Which means we need more homes to sell. If the Fed continues to raise interest rates, that could slow down demand because it makes buying a home more expensive, but that isn’t really making the housing market better. It just means that there are fewer people who can afford to buy …who can afford to buy a home. The only way to make the housing market better, meaning more affordable for everyone, is to build more … more supply to meet the demand will help to balance the market.