Housing market predictions for late-2022 (Podcast)

April 18, 2022 - 3 min read

The 2022 housing market is changing — slowly

“In 2020 and 2021, we saw home values just go through the roof,” mortgage expert Ivan Simental said in a recent episode of The Mortgage Reports Podcast. “We’ve never experienced anything like that. We saw values increase by double digits.”

Those soaring prices were the by-product of three underlying conditions:

  • High demand (particularly during the pandemic)
  • Bargain-basement mortgage rates (the lowest on record)
  • Extremely low housing supply, which Freddie Mac estimates is about 4 million homes short of demand.

We’re now well into 2022. And while some of those conditions remain the same, the market has evolved a bit since then.

Does that mean prices will drop and homes will become more affordable for hopeful homebuyers? Here’s what Simental had to say.

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House prices will grow, but at a slower rate

The biggest change we’ve seen in 2022 is higher mortgage rates. The average rate on a 30-year mortgage loan is now nearing 5% and is well above last year’s historic lows.

It has certainly cut into demand a bit. According to the Mortgage Bankers Association, mortgage applications to purchase a home are down 9% compared to a year ago.

Is it enough to make a dent, though?

“Prices won’t decline this year, but the amount they’re increasing will. The speed we’ve seen in the last two years is going to go down”

–Ivan Simental, Senior Loan Officer, Movement Mortgage

Likely not. Supply still remains low, and the number of active listings is down 62% compared to 2020. As Simental explained, “There has been a crazy amount of demand still, and bidding wars are still in play.”

He’s right: According to Redfin, more than two-thirds of buyers faced a bidding war last month — the largest share ever recorded.

For these reasons, Simental said price growth will likely slow this year. But price drops? Those just aren’t in the cards.

“Despite higher interest rates, there is still a projected growth in 2022,” Simental said. “Home values will go up. For some, it’s going to go up in double-digits again. For others, it will be single-digits. It’s not stopping yet.”

Should you buy in 2022?

In a nutshell, Simental said, “Prices won’t decline this year, but the amount they’re increasing will. The speed we’ve seen in the last two years is going to go down.”

Still, that doesn’t mean buyers will have it easy. Prices are still at their highest point ever and rising, and with higher mortgage rates, affordability will be a real issue for many.

“The biggest thing is affordability,” Simental said. “That’s what individuals are struggling with right now.”

If you’re worried about how rising rates or prices will impact your homebuying goals, talk to a mortgage expert. They can point you toward a loan program that can minimize your costs and put homeownership within reach despite current market conditions.

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Aly J. Yale
Authored By: Aly J. Yale
The Mortgage Reports contributor
Aly J. Yale is a mortgage and real estate writer based in Houston who has contributed to Forbes and worked for organizations such as The Dallas Morning News, PBS, NBC, and Radio Disney.