Housing Market Predictions 2022: Will It Crash or Boom?

So, you’re thinking pretty hard about buying or selling a home in 2022 and want to know how the housing market will look. Well, housing market predictions are about as reliable as a weather forecast—no one can predict what’s going to happen with 100% accuracy. But we can check out what real estate experts are saying and make some guesses about the future from there.

Remember, a housing market forecast can only give you an idea of what to expect if you buy or sell a house in the coming months. Never let it control your housing decisions—only your personal situation and finances should do that!

With that said, let’s take a closer look at what the market is doing.

Housing Market Predictions for 2022

The housing market exploded like fireworks last year—and many of those sparks may continue flying in 2022.

Experts are still seeing a post-pandemic rebound—we’re talking steady mortgage rates, job recoveries, and the law of supply and demand all working together to make home sales go kaboom!Find expert agents to help you buy your home.

The final four months of 2021 saw home sales rise in September, October and November.¹ And even though sales dropped a little in December, they were still up from the year before.² There’s high demand with low inventory, so buyers are still rearing and ready to enter the market.

Here’s an overview of what experts predict will happen in the housing market leading into 2022:

Housing Market Stats	2022 Annual Predictions	2023 Annual Predictions
Home sales	6.9 million	7 million
Home prices	Up 6.2%	Up 2.5%
Mortgage rates (30-year fixed)	3.6%	3.9%3

To help you put those home prices into dollar signs, the median home cost rose to just over $346,900 last year—that’s more than $50,000 higher than in 2020!⁴ And certain months saw even higher median home price spikes. For instance, the median home price was $358,000 in December, which set us up for more sky-high prices leading into 2022.⁵

And let’s not forget how interest rates will affect the overall cost of your home! Last year, interest rates were at an all-time low—anywhere from 2.15–2.39% for a 15-year, fixed-rate mortgage or 2.74–3.10% for a 30-year, fixed-rate mortgage.^6,7

But mortgage rates have already started increasing in 2022. Like everything else, mortgage rates are influenced by the economy and inflation. And the Federal Reserve has announced it plans to raise interest rates this year as part of its efforts to slow inflation.⁸ While that move alone won’t directly impact mortgage rates, the overall change in the Fed’s policies will likely lead to increased interest rates for all borrowers. That stinks because it means new buyers will end up paying more for their house over time. 

Keep in mind, these numbers will probably change as the experts crunch new data. But the bottom line is that in 2022, home sales will probably stay mostly the same, interest rates will probably go up, and home prices will likely continue to rise (but hopefully at a slower pace).

Okay, now that we’ve covered a housing market forecast at the national level, let’s dig deeper into what’s happening for buyers and sellers in each state and explore the top questions people have about the housing market forecast in 2022.

Will Buyer Demand for Housing Remain Strong?

Real estate experts say buyer demand will stay pretty darn strong in 2022. Homes for sale received an average of 3.8 offers to buy in the months leading up to 2022, up from an average of 3.5 offers in late 2020 (not exactly a mind-blowing increase, but hey, it counts).⁹

Real estate agents across the country were asked to describe their market based on how many buyers were looking for homes, and they had a lot to say . . . probably because there are a lot of buyers! Check out the map to see how hot the buyer traffic looks in your neck of the woods:

All that to say, it looks like buyer traffic (aka demand) will remain moderately strong throughout most of the country in 2022, which is a great sign for sellers.

Will Housing Inventory Still Be Low?

Yep, it’s looking that way! The number of homes actively listed for sale dropped by nearly 180,000 homes at the end of last year, and inventory was down almost 27% compared to the same time frame in 2020.¹⁰

The next map shows that the majority of markets are looking somewhat slow when it comes to seller traffic (aka inventory)—so buyers will have to work harder or wait a little longer to find their dream home.

So, to recap: If you live in a state that’s blue on this map and you’re thinking about selling your home, now’s a great time—you’ll be one of the few sellers in your market! For buyers, you’ll have the most homes to choose from in the orange and red states.

How Fast Will Homes Fly off the Market in 2022?

There’s a good chance homes will continue to get snatched up fast in 2022. In 2020, most homes stayed on the market for 21 days—and we’re now seeing homes go a little faster, typically selling after 19 days.¹¹

Now, this is great news for sellers who are itching to get their homes sold fast. But buyers need to stay focused! You don’t want to drag your feet once you find a home that fits your budget and your family because it’ll likely be gone if you wait too long to commit. That’s why you’ve got to know exactly what to look for in a home and what you can afford before you jump in the game.

Of course, every market is a little different. Here’s a state-by-state breakdown so you can see about how many days existing homes stayed on the market in your area:

Will There Be a Lot of Foreclosures in 2022?

The nation started seeing a huge jump in foreclosure activity toward the end of last year, but the numbers are still much lower than pre-pandemic levels. In fact, foreclosures hit an all-time low, down 30% from the year before.¹²

But before you get too excited, hold your horses. One huge, glaring reason for that historic low was the government’s temporary ban on foreclosures. Foreclosures weren’t happening for most of last year because they couldn’t happen.

Foreclosures started rapidly increasing toward the end of last year, around the time the government lifted the ban. Last September, foreclosure filings were up 24% compared to the previous month—and up 102% compared to a year earlier!¹³

So, while there will probably continue to be way fewer foreclosures than in a normal housing market, it’s likely that more foreclosures will happen in 2022 as mortgage lenders work to get back to their version of normal.¹⁴

Here’s what all this foreclosure stuff means for homeowners and buyers:

• Homeowners: With the end of the government’s ban on foreclosures, it’ll be tough for any homeowner who lost a stable job and income to keep up with mortgage payments. If that’s you, hang in there! There’s more you can do to avoid foreclosure, like tightening up your monthly budget and finding multiple jobs.
• Home buyers: More foreclosures mean you might find a sweet discount on a house! But keep in mind, buying a foreclosed home could come with its own set of potential issues. So, make sure you do your homework on the house and know what you’re getting yourself into before you buy.

Will the Housing Market Crash in 2022?

It’s pretty unlikely that the housing market will crash in the next few years. Experts say the current market is way different than how it was around 2008–2010—the last big housing bubble. Here’s why:

• Mortgage providers now have stricter lending rules to help prevent defaults caused by risky subprime mortgages.
• Housing supply is still super low and probably won’t catch up for a few years—so there’s little to no danger of home prices dropping like a rock.¹⁵

Here’s the deal: If the number of houses for sale was crazy high and the number of buyers willing to buy them suddenly plummeted, housing prices would get slashed—and that’s when a crash would be something to worry about. But as long as new buyers continue to enter the market and there aren’t enough homes for sale to meet their demand, home sales and prices will continue going up, and the market should stay healthy.

Will Housing Market Prices Go Down in 2022?

Like we said, it’s unlikely that home prices will go down any time soon—especially not in 2022. Some experts think home prices will grow at a slower rate (6%) than we’ve seen recently.¹⁶ But others think growth will continue at around the same pace as last year (16%).¹⁷ And who knows? Prices could grow even faster!

Here’s a look at what home price growth could look like per quarter in 2022, according to Freddie Mac:

2022	Home Price Growth Predictions
Q1	1.5%
Q2	1.5%
Q3	1.5%
Q4	1.5%18

Remember, that’s on the low end of the growth experts are expecting. If demand keeps increasing and inventory keeps dropping, then people will be willing to pay even more for housing and prices could grow faster.

On top of that, it’s really hard to predict home prices. So whatever you do, keep saving for a big down payment if you want confidence when buying a home.

Is 2022 a Good Year to Buy a Home?

The year 2022 could be a great year to buy a house—if you’re ready. It could also be a horrible time to buy if you’re not. Remember, don’t let what’s happening with the housing market make your decisions for you.

The things that really matter when buying a house are your personal finances and season of life. No matter what’s happening in the market, you’re only ready to buy a house if you meet these qualifications:

• You’re debt-free.
• You have an emergency fund of three to six months of expenses.
• Your monthly house payment will be 25% or less of your monthly take-home pay.
• You have a 10–20% down payment.
• You can pay the closing costs up front.

If you don’t meet these qualifications, it doesn’t matter if the market is in your favor. Buying a home right now would end up being a curse instead of a blessing. Take your time and get in a better financial position so you can buy a house the right way.

What Does All This Mean for Home Buyers in 2022?

Okay, it looks like you’ll still need to bring your A game if you want to buy the home of your dreams in this market. With more buyers than sellers, you’ll probably be up against some heavy competition, high housing market prices, and maybe even a bidding war.

Another downside: Signs are showing that the low inventory issue is going to hang around for a while. Home inventory did increase a little last fall—rising to a nearly seven-month supply—but it didn’t stay that way.¹⁹ At the tail end of the year, inventory tanked to just a 1.8-month supply.²⁰

And while homebuilders are confident they’ll do plenty of business in 2022, that doesn’t mean buying a newly built house will be easy for you.²¹ Rising prices, supply shortages and even government tariffs are all making it crazy hard for homebuilders to actually build enough houses to keep up with demand.^22,23

Translation: The pickings may be slim when it comes to buying a house. That means you may have to give up some of your wants to get a house that has everything you need.

But don’t worry—there’s a bright side for buyers too.

If you’re getting a mortgage, interest rates are still looking as good as a blue snow cone on a hot summer day—for now. But like we said at the beginning, they’re slowly inching up and will likely keep increasing in 2022 (thanks a lot, Federal Reserve).

Still, you’ll probably have a good chance of locking in a lower-than-average mortgage rate. And for the record, lower rates are a good thing because they mean a lower monthly payment and less of your money going toward interest over the life of the loan. Woo-hoo!

What Does All This Mean for Home Sellers in 2022?

Sellers out there can feel pretty good about selling their homes in 2022. If that’s you, you might want to put your house on the market sooner rather than later—while inventory is still low. (But again, only do that if you’re truly ready to sell your house. Don’t let the market be the deciding factor!)

If you do decide to sell, you may have a little more competition in 2022 due to foreclosures picking up again and home prices rising. But the good news is that there are still plenty of buyers out there.

If you work with an experienced agent, you’ll be able to capitalize on home prices, navigate multiple offers, and find the right buyer. With an expert by your side, it’ll be even easier to sell your house at a great price this year.

How to Buy or Sell With Confidence in Any Housing Market

The housing market isn’t known for being easy to predict. That’s why it pays to have a trusted professional in your corner.

Whether you’re buying or selling, you need an agent who has weathered the storms of real estate. And you can find them through our Endorsed Local Providers (ELP) program. ELPs have earned our seal of approval as RamseyTrusted pros. We only recommend top-notch agents who help you crush your housing goals—no matter what the market is doing.

Find a RamseyTrusted agent!

ABOUT THE AUTHOR

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.