If you haven’t been living under a rock, you probably know that the housing market in the United States has been on fire for a while now. In 2020, home prices and sales significantly increased and have been at high levels ever since. Houses are going on the market and selling hours later for thousands upon thousands of dollars over the asking price一in cash. 

There are many potential reasons for this, including lower interest rates, much higher demand for single-family homes,, fewer expenses during the pandemic, and more. This has led to increased demand in the home market in almost every state in the country, as the number of prospective buyers has grown with many Millenials reaching home-buying age

A question that many people are asking about the future is whether the housing market will continue to rise or if it’s bound to crash, and if so, when? This article will cover some of the main housing market trends from 2021 and touch briefly on what might be in store for 2022. 

Are House Prices Going Down? 

As of October 2021, housing prices were still on the rise. In the South, the average home price jumped by 16% compared to last year, while the Midwest trailed behind with prices rising by only 7.8%, then came the West with 7.7%, and lastly the Northeast where home prices grew by only 6.4%. 

These statistics show that, as of right now, prices are continuing to rise. While it’s not impossible for the bubble to burst in the new year, it’s hard to make that prediction with any kind of certainty, especially if the government continues to support homeowners wiht low interest mortages and tax incentives. 

Thanks to the prevalence of remote working, a larger percentage of the workforce now has the flexibility to move whenever and wherever they want, which has contributed at least in part to the increased home sales in some parts of the United States. The pandemic also left a lot of people reluctant to sell their home because they were unsure of their future. Homeowners who may have considered selling their home in 2020 chose to stay put and weather the uncertainty in familiar surroundings. This reduced inventory and at the same time, builders stopped building. Lumber Yards halted production because they had no skilled workforce to generate an inventory. Building supplies were scarce and lumber skyrocketed in price.

Furthermore, rental rates (along with prices of many consumer goods and necessities) have been on the rise this year thanks to the rebounding economy and rising inflation. This may fan the flames of demand in the housing market in 2022 as renters decide to invest their money in real estate instead of ‘wasting’ their money on rent each month.

What Will Happen to the Housing Market in 2022?

It’s probable that the housing market will cool down in the coming year as the economy continues to rebound, but the demand for houses is likely to remain high. New construction can only make so much of a contribution to the supply of homes, and if the demand remains the same as the supply stays stagnant or decreases, prices will continue to rise.

It’s challenging to forecast home prices and demand for 2022, as the future of the pandemic (still uncertain) will likely have an effect on the economy, which will in turn have an effect on the housing market. Regardless, investing in real estate remains an excellent choice for both prospective homeowners and people looking to expand their portfolios.