2022 Housing Market Forecast - Are We Crashing?!

2022 is right around the corner. Many people are wondering what the housing market has in store for us; I'll be addressing what the California Association of Realtors (C.A.R) is forecasting for our housing market and what I see in my day-to-day activities as a real estate professional, also, what industry experts see in terms of a market crash. 

Going into 2022, we will see similar things like 2021; however, these bidding wars will probably cool off. C.A.R is projecting that California is going to have 5.2% less inventory than 2021. We had historically low inventory levels in 2021; going into 2022, we're going to have less to choose from. 

Interest rates will go up slightly, still historically low; however, your buying power will decrease. This means you're not going to be able to purchase a home at the same price point because the half-point interest rate rise will affect the debt to income. 

Housing affordability is the likelihood that a single family can afford and qualify for a 30-year mortgage; it goes by index. In 2021 the housing affordability index was 26; C.A.R predicts it will be at 23 in 2022. The way the economy is going, we see restaurants raise their prices, gas prices are going up, home prices are going up, the average family isn't able to afford what they were able to afford last year.

Are we going to crash? Probably not, and why is that because it's not the same as 2008. In 2008 we saw subprime lending; subprime lending was different from what's going on right now, low inventory and low-interest rates created buyer demand, which, by the laws of supply and demand, if there's not a lot. There's a lot of demand price is going to go up, that's what happened. So we're not going to see a crash.

I suggest buyers have a similar mindset as 2021, work with a competent Realtor who can guide you on the right price to offer on a home, put in solid and aggressive offers the first time, and be patient. 

Sellers have one job in 2022; trust your real estate professional. When your house hits the market, first impressions are everything. The prep time you're going to take in the beginning will make the difference once you come to market. After all, homes are so scarce if you're presenting one that looks top tier, you're going to get a bunch of buyers to come in drive up that price because there's low inventory, you're going to be in a good position to cash out on the equity you've gained in the last year.