Housing Market Predictions 2021 & 2022: Will It Crash or Boom?

10 MINUTE READ | October, 2021

So, you’re thinking hard about buying or selling a home sometime soon and want to know how the housing market forecast looks. Well, keep in mind that no one can predict what’s going to happen with 100% accuracy. But we can check out what real estate trends are happening and make some guesses about the future from there. (Hint: It’s still looking hopeful!)

Remember, 2021 housing market predictions can only give you an idea of what to expect if you buy or sell a house in the coming months. But never let them control your housing decisions—only your personal situation and finances should do that.

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

Your Housing Market Forecast for 2021

The housing market in 2021 is continuing to explode like fireworks. 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! There’s high demand with super low inventory, but buyers are still rearing and ready to enter the market.1

Toward the end of 2020, real estate gurus projected that low mortgage rates and the rise of remote workers with flexible schedules would keep home sales booming. Comparing those predictions with the numbers from the second quarter of 2021, reality is beating out expectations in most categories. Take a look:

Housing Market Stats2021 Year-Over-Year Predictions2021 Year-Over-Year Q2 Actual
Existing home salesUp 9%Up 23%
Newly built home salesUp 21%Down 19%
Home pricesUp 8%Up 23%
Mortgage rates (30-year fixed)At 3%2,3At 2.98% 456

Okay, so if you’re looking to buy a house right now, those second-quarter numbers may seem a bit scary. Home sales are up, prices are up, and there are less newly built homes available. Putting those stats into dollar signs, the average home cost rose to $363,300 in June.7 That’s nearly a $70,000 jump in price compared to June of last year!8

But, buyers, take a deep breath. Don’t let the data squash your dream of buying a home just yet! Remember that these numbers are only based on the first half of 2021. Plus, those percentage changes are compared to what was happening in the first half of 2020, and we all know there was some weird stuff going on back then. So it’s not totally crazy to see big changes.

Also, keep in mind, these numbers will probably keep changing here and there as experts crunch new data. But the bottom line will mostly stay the same: Home sales and prices are likely to stay higher for the remainder of 2021 compared to last year, while inventory will remain relatively low.

Plenty of Home Buyers Continue to Enter the Market

Real estate agents across the country were asked to describe their market based on how many buyers were looking and how many sellers were selling. Check out the map to see how hot the buyer traffic looks in your neck of the woods:

Realtors say while the market is still pretty darn hot, buyer demand shows signs of softening. In May, homes received an average of five offers, but as of June, they sold with an average of four offers—which, while less, is still a whole bunch of offers.9 And it looks like buyer traffic is remaining moderately strong throughout most of the country, which is a great sign for sellers.

Not Enough Homes Will Be Listed for Sale

On the other hand, the number of homes actively listed for sale is down 43% compared to last year.10 The next map shows how the majority of markets are looking somewhat slow when it comes to seller traffic—so buyers will have to work harder (or wait a little while) to find their dream home.

How Fast Are Homes Flying off the Market in 2021?

Before the start of 2021, existing homes were typically on the market for 21 days—meaning houses were already being plucked off the market two weeks faster than the typical 38 days in 2019.11 And we’re now seeing homes go even faster, typically selling within 17 days on the market.12 That’s another new record!

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 the best home 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 2021?

Early projections showed that 225,000 to 500,000 homeowners across the country might face foreclosure (eviction for missing mortgage payments) in 2021.13

Even with the government’s temporary ban on foreclosures to provide housing relief during the pandemic lasting until July 31, foreclosures already started to tick back up in the spring—especially on vacant or abandoned properties.14 Now, with the ban over, we’ll likely start seeing more foreclosures in the last half of 2021. But total foreclosures year over year are still way down. In the first half of 2021, there were 65,082 foreclosures.15 That means overall foreclosures compared to the same period last year are down 61%.16

Even with numbers like that, experts are predicting an increase in foreclosures.  Their projections are mostly based on job losses connected to the pandemic. And with the government’s ban on foreclosures ending, it will be tough for a homeowner to keep up with mortgage payments after losing a stable job and income. 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.

On the other hand, what do more foreclosures mean for home buyers? You might find a sweet discount! 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.

Is the Housing Market Going to Crash Before 2021 Is Over? What About 2022?

It’s pretty unlikely that the housing market will crash in the next two years. Remember, home prices have already seen a 23% increase in 2021, almost triple original predictions.17,18 That’s a good thing for the economy!

Back in 2020, experts projected that home prices would keep increasing in 2022, growing at a slightly slower rate of 5.5%.19 Well, they’re still thinking home prices will grow, but more slowly than they have this year—probably around 3% with a median purchase price of $334,000.20 But after seeing how far off predictions were for 2021 . . . well, who knows what will happen.

So, the question that’s always looming: When is the market expected to crash? Here’s the deal. As long as new buyers continue to enter the market and there aren’t enough homes for sale to meet demand, home sales and prices will continue going up, and the market should stay healthy.

On the other hand, if the number of houses for sale was crazy high and the number of buyers willing to buy them suddenly plummeted, home prices would get slashed—and that’s when a crash would be something to worry about.

What Does This Mean for Home Buyers for the Rest of 2021?

Okay, it looks like you’ll need to bring your A game if you want to buy the home of your dreams this year. With more buyers than sellers, you’ll probably be up against some heavy competition, high home prices, and you might even have to gear up for a bidding war. But don’t worry—there’s a bright side for buyers too.

If you’re getting a mortgage, rates are still looking as good as a blue snow cone on a hot summer day. In 2021, the annual average interest rate for a 15-year, fixed-rate mortgage hit an all-time low at 2.29%.21 The way things are looking, rates seem like they’ll stay pretty low through the end of the year and into 2022.

That means you’ll probably still 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!

Another bright side: Signs are showing that low inventory (bottoming out in April at 33% down year over year) is on the up and up!22 Since its low, inventory has slowly but surely crept back up each month—in June, it was only down about 29% year over year.23 Many experts anticipate  inventory to keep climbing (ever so slowly) in the second half of 2021. That means balance in the market is on the horizon and less competition for your dream home.24

What Does This Mean for Home Sellers in 2021?

Sellers out there can feel pretty good about the rest of 2021. If that’s you, you might want to put your house on the market sooner rather than later while inventory is still low. There are plenty of buyers out there, but experts are predicting more people will sell within the next year, meaning you’ll have more competition.25

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, you should have no problem selling your house at a great price this year.

Housing Market Predictions for 2022

Right now, the housing market is red hot, with many homes selling above value simply because there are tons of buyers and not enough homes for sale. Is that going to continue through 2022?

Well, of course, no one can know for sure. In a Zillow research study, more than 69% of real estate gurus surveyed said they expected more houses to go up for sale in the second half of 2021 or the first half of 2022.26 And if more homes go up for sale, home prices should cool down too. Experts are predicting annual home value growth to slow to 4.5% in 2022 and continue a downward trend through 2025.27

Experts are also predicting more housing starts (aka new construction) in 2022. Look at it this way: There were 1.38 million housing starts in 2020, and it’s looking like 2022 will see more like 1.68 million.28 More new houses means more inventory and less market mayhem.

How to Buy or Sell With Confidence in Any Housing Market

The housing market isn’t known for being simple to predict. That’s why it pays to have a trusted professional in your corner. Contact us today, a Nationwide Real Estate Solutions Provider for Sellers, Investment Property Buyers, Lenders, Tenants and Homeowners. We are Capital Gains Tax Deferral and Retirement Account Investment Specialists.

Sources: National Association of Realtors, Zillow, Attomdata, Ramsey Solutions, FreddieMac.

Get More Real Estate Market Info... Subscribe Below!

Learn more about us and find other resources on buying investment properties with us. Like us, follow us, connect!

Leave a Reply

Your email address will not be published. Required fields are marked *