Housing Market 2022 – Get real estate industry leader Brian Icenhower’s take on the state of the 2022 housing market and his prediction on the future of home prices.
I’d like to shed some light on the current housing market in 2022. There has been a lot of confusion around it. Especially coming off two red-hot years when home prices went through the roof and buyer demand went crazy. Today, I’m going to discuss our current housing market. Are we headed for a crash?
VIDEO: Housing Marketing 2022 – Headed for a Crash?
Housing market 2022: where are we now?
One thing has remained true in for our housing market in 2022: we still have a very low amount of housing supply, relatively speaking. I know that is confusing a lot of people because we are seeing more listings on the market then we did during the pandemic.
However, relatively speaking, supply is still very low. Take a look at this graphic that we created (as shown in the video) based on data from NAR that will illustrate this very clearly.
If you look at the graphic on the far right side you’ll see that, yes, housing supply has come up just a touch. We’re now even with where we left off in 2019 before the Covid-19 pandemic hit. That was still a red-hot sellers’ market with extremely low inventory.
One of the reasons we call it “supply-side economics” in our analysis of real estate is because supply (or a lack thereof) is much more prominent and important compared to demand.
Right now, in the 2022 housing market, a lot of people are afraid with threats of a recession, interest rates rising, and other alarming changes which have caused a decrease in buyer demand. That is valid! But please understand that supply is still ridiculously low. And when supply is low, one thing we know to be true is that prices will go up. This is true with any essential commodity, like oil, milk, etc.
In real estate, we call inflation “appreciation,” which is a good thing. Home prices are expected to continue to increase throughout this housing market in 2022. Every economic indicator says so. On the graphic we provided, you can see we have a long ways before we get anywhere near a buyers’ market.
It takes over 7 months of inventory (in the yellow section on this graphic) to get into a buyers’ market. You can see that a neutral market is around 5-7 months of inventory, and of course, a sellers’ market is anything 5 months or less. We are at around 3 months of inventory right now (national average) and we are well within this green zone of being in a sellers’ market.
What does housing inventory indicate?
Housing inventory is very simple, it’s the most important metric we use when determining projected home prices. It simply means that with 3 months of inventory, at our current rate of sales, it would take 3 months for all the homes that are currently on the market to sell.
That’s very, very fast. It’s red-hot fast. It’s the fastest we’ve seen in the last 40 years (not counting the two years during the pandemic.) We have a very hot market.
Please get the word out to your home buyers and home sellers. It’s a wonderful time to be investing in real estate.
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