According to an analysis by Zillow, they expect housing prices to jump by as much as 22% this coming spring. This is blamed largely on a continuing shortage of available housing inventory, meaning there are far fewer houses than there are buyers. This, in turn, could lead to problems as even the most affordable homes on the market become too expensive for many prospective home buyers to purchase.
The State of the Housing Market Going Into 2022
Prior to the beginning of the year, many real estate firms expected housing prices to start to cool off, as the rate of price growth had started to decline from August through December 2021. In fact, back in December, Zillow predicted that the price growth for housing would decline to 11% in 2022, compared to the high of 20% in August 2021. This was based on the idea that housing would begin to become more available, reducing the strain on the housing market.
The Current State of the Housing Market
Unfortunately, this predicted stabilization did not come to pass, and instead housing prices are once again soaring. Zillow predicts that prices could rise as high as 21.6% above what they were in the previous year by May, with prices stabilizing around 17.3% by the end of the year. This means that rather than cooling off, the U.S. housing market will likely only get hotter over the coming months.
The Cause of Current Trends
The primary cause for these predictions are simple: rather than more homes becoming available, there is even less inventory for sale than there was in 2021. In fact, the number of homes available for sale is about 42% below what they were in January 2020, signaling a major shortage of available homes. And unfortunately, it does not look like this shortage of available inventory will end any time soon.
How This Will Affect Home Buyers
Anyone looking to purchase a home right now is likely to face significant hurdles in finding a house. Not only is the number of available homes plummeting, but the shortage of inventory means the price of each home is skyrocketing beyond the point where many people can afford them. At a certain point, this could wind up chilling the real estate market as prospective home buyers are frozen out by unaffordable prices and an overwhelming amount of competition for even the most modest of homes.
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