TOP 4 Useful Real Estate PREDICTIONS for Fall 2022 | 6 Signs of a Housing Market CRASH to Watch!

TOP 4 Useful Real Estate PREDICTIONS for Fall 2022 | 6 Signs of a Housing Market CRASH to Watch!

What would happen if you asked ten people one question about real estate predictions?  Like, do you think the housing market will crash? 

What do you think they would say?  Would you get the same answer or possibly ten different answers?  What would you say?

2022 Fall Housing Market Predictions

In a recent post by Bankrate, they looked in their crystal ball and discovered four useful real estate predictions for this fall.  So let’s see how they answer the question.

Prediction 1 – Dramatic Housing Deceleration 

Ok, so Rick Sharga is the executive vice president of market intelligence for ATTOM Data Solutions.  Rick said the signs are undeniable the market is cooling dramatically. 

He notes that the “decline is almost entirely due to the impact that increased mortgage rates have had on housing affordability.”  He mentioned home loan applications are down 23% from 1 year ago.

Rick believes “home price appreciation is likely to end 2022 in the low single digits – likely in the 2-3 percent range.”

So, suppose home prices do slow down more or even come down.  Presumably, that might give homebuyers previously priced out of the housing market an opportunity to buy a home if they’re ready. 

It could happen.  Consider this Fitch Ratings Home Price Report from the 2nd quarter.  They estimate home prices in 89% of major metros are overvalued.  

Prediction 2 – Housing Bubble Forecast 

Naturally, hearing things like this could make people think a housing Bubble has formed and pop is inevitable.  Coming up, we’ll talk about the six signs of a housing bubble to watch – you be the judge. 

But for now, let’s see what Odeta Kushi, the deputy chief economist for First American Title, says. 

Odeta said, “the housing market today is not driven by loose lending standards, sub-prime mortgages, or homeowners who are highly leveraged.” 

That’s interesting because a recent Corelogic report about homeowner equity found the “average equity per homeowner is almost $300,000!” 

Odeta says, “the house price appreciation in today’s housing market is supported by the fundamentals and characterized by a supply shortage relative to demand.” 

To back her up, Kenon Chen, the Executive Vice President of Corporate Strategy at Clear Capital, has this to say. 

Kenon said, “At a fundamental level, the labor market remains strong, loan delinquency is historically low, and supply is only 57 percent of where we were at the beginning of 2019 – without a major economic shock, a bubble still seems unlikely.”

So, they don’t seem to think a housing bubble is likely without severe economic shock.  It looks like the lightning bolt pace of Fed Rate Hikes might not be enough.  We’ll see.  Time reveals all.

Coming up, we’ll talk about how the supply of homes vs. home buying demand affects the housing market.  

Prediction 3 – Homebuyer Personas 

But for now, let’s find out who is buying the available homes.

Odeta says home buying demand “has primarily been driven by millennial first-time home buyers aging into their prime home-buying years.”

Yes, Millennials account for roughly 37% of all home buyer activity, as seen from this chart.  The chart comes from data supplied by the National Association of Realtors, or NAR for short.

So that’s the share of homes that went to first-time home buyers. But what about the other 63% of homes? Where did they go? 

As it turns out, 56% of all homes sold went to Gen X and Boomers.  They were likely moving up, down, or possibly into their forever home. 

As we can see, home buyer demand spans all generations.  It’s not limited to any generation – everyone needs a roof over their head.  Whether you rent that roof or own it, you gotta have it.  

Prediction 4 – Supply & Demand

When it comes to housing demand, it’s as strong as ever.  The issue is the lack of housing affordability we’ve seen escalate over the past couple of years. 

Rick Shraga puts it this way.  “We have the largest cohort in US history of young adults between 25 and 34 – the prime age for household formation and home-buying – and this group will continue to propel demand for the next two to three years.”

While that is undoubtedly true, the glaring omission, at least in my opinion, goes back to the chart we just reviewed.  It’s not just Millennials buying homes. 

We gotta be honest here.  The homebuyers of today and tomorrow face increased competition for the scarce amount of homes for sale arising not only from other generations but also the surge of ibuyers and big investors sourcing funds from real estate investment trusts or REITs for short. 

This is alarming to me.  I think anyone who can purchase a home should have the opportunity to buy a house if they want.  They shouldn’t have to fight with big investors to buy a home. To me, that should be illegal in this country.  What we’re seeing in the housing market is shameful.  At to me.  What do you think?

I think Rick hits the nail on the head from the supply side of things.  He said, “homeowners with sub-4 percent mortgage rates are opting to stay put rather than buy a more expensive home with a 6 percent mortgage.”  In short, it seems Rick believes housing inventory might slowly increase due to homes taking longer to sell rather than a spur of new listing activity.

That’s probably because many homeowners also realize they are effectively priced out of the housing market from when they purchased their homes.   

For every point of view, a view comes into focus that both buyers and sellers are weighing their options and timing carefully.  Because of this, there will be an opportunity for serious sellers and buyers to move forward with their life plans if they choose.  

But one thing’s for sure, the real estate market will always go up, down, and all around.  The one thing that doesn’t change is where someone is in their life when the time is right for them.  So it’s a matter of clarifying why buying or selling a house is important to you.  

6 Signs of a Housing Bubble!

A growing consensus among Housing experts about how housing bubbles form can shed some insight into what could happen as we move forward.  They seem to agree a housing market crash has 6 signs to watch.  

What are they?   Well, let’s go over the list, and you be the judge of how many signs we’ve blown by. 

Sign #1 – Increasing loan-to-income levels

Sign #2 – Overpriced properties that outpace affordability, inflation, and economic fundamentals

Sign #3 – Higher Mortgage Rates

Sign #4 – Lower Economic Growth

Sign #5 – Escalating Mortgage Balances

Sign #6 – Climbing subprime mortgage loan numbers

Would you agree with this list, or do you think the experts are missing something?  Share your thoughts with us in the comments.  Thank you. 

Should You Buy a House Now or Wait? 

Should you buy a house with all the turbulence in the housing market and economy right now?  Some say yes, and some say no.  Honestly, it’s really up to you if it makes sense.   Get in touch with yourself about why buying a home is important to you. 

It’s not like renting a place is any better right now, with many landlords keeping their rental rates high.  But that’s a different story.

Suppose you’re planning on getting married, raising a family, or simply wanting some predictability with your monthly housing costs. 

In that case, you might be considering buying a house.  Because a certain amount of stability comes with owning a home, but homeownership isn’t for everyone.

Look, my only concern is you.  So please think through your decision and don’t bite off more than you can chew, no matter what you decide. 

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Post a Comment