Has the Bubble Popped or Just Deflated? What To Expect in Real Estate Trends Through the End of the Year

Over the past two years, it seems like everyone has been talking about the state of the housing market. Economic crises like the COVID-19 pandemic, the war in Ukraine, and a global recession on the horizon make the foreseeable future look uncertain. Will the housing bubble pop?

To answer this question, we will need to review some key considerations. This article will explain the current housing market conditions and what they mean for prospective homebuyers.

The State of the Housing Market

As of early 2022, notable housing market predictions suggested that the United States will continue to be an intensive seller’s market for some time. We can observe a steep decrease in home construction rates and a high demand for property. Home prices remain high in many cities as the nation recovers from its post-pandemic dip.

First-time homebuyers expect the real estate market bubble to burst at any moment, reducing home prices. Millennials and older Gen Z buyers now drive much of the housing demand. Still, these prospective buyers may need to wait a little longer before seeing significant changes in real estate market trends.

Will the Housing Market Crash?

The current housing market forecast does not predict a significant drop in home price trends. In fact, earlier this year, some market intelligence experts believed home price growth would continue to rise, despite buyer demand. This prediction may surprise some who continue to see active listings appear all over town.

It’s important to remember that housing bubbles are quite rare. In hindsight, the last housing downturn in 2008 occurred more from runaway speculation—people buying homes with variable mortgage interest rates they could not afford—than home values rising themselves.

With strong job growth and investors in a more financially stable place today than their 2000s predecessors, a plunge does not seem likely.

What To Expect With Mortgage Rates

Housing markets are cyclical. Mortgage rates rise and eventually flatten out or drop (sometimes dramatically, sometimes not). Real estate investing in 2022 yields some specific challenges.

Rising interest rates have doubled since the beginning of this year. Consequently, existing home sales appear to be down nearly 20% from last year.

A real estate agent may notice they are receiving fewer offers on homes than they did in the last few years. This problem may have investors wondering whether their home price appreciation will soon drop.

Is It Time To Buy or Sell Property?

Any wise investor knows the market can change at a moment’s notice. Still, most analysts predict that housing market prices will be rather tepid at the end of 2022 and the beginning of the new year. It is less likely that buyers will engage in bids without incentive.

At best, the next few months will provide great training for real estate agents navigating this uncertain economic climate.

Learn More About the Real Estate Market

Did you enjoy this article? At Key Realty, we help realtors understand the current economic forecast. 

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