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UPDATED Housing Market Forecast for 2022 by Zillow & Redfin!

CURRENT UPDATE!!! Zillow & Redfin have updated their housing market predictions for 2022. Will home prices finally fall in 2022 since mortgage interest rates are continuing to rise in the housing market? Will 2022 be stronger than 2021 or will it crash? Will the inventory finally increase allowing buyers to take their time on purchasing a house? Or will first time home buyers be priced out of the market due to scarce inventory and higher interest rates?

Zillow November 2021-November 2022 Home Value & Sale Forecast

  • Zillow expects home values to grow 14.3% between November 2021 and November 2022, and to end 2021 up 19.4% from December 2020.
  • Existing home sales in 2021 are expected to total 6.13 million in 2021, up 8.6% from 2020. Sales growth is expected to continue into 2022, with more than 6.5 million existing home sales forecasted to close next year.

They do go on to say: “However, downside risks to our forecast remain. The expiration of mortgage forbearance programs adds uncertainty to the outlook for for-sale inventory, and elevated inflation heightens the risk of near-term monetary policy tightening, which would result in higher mortgage rates and weigh on housing demand”.

 AS of February 2022, only 1.6% loans remain in Forbearance.

  • 29.1% resulted in a loan deferral/partial claim.
  • 19.5% represented borrowers who continued to make their monthly payments during their forbearance period.
  • 16.9% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
  • 14.6% resulted in a loan modification or trial loan modification.
  • 11.7% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
  • 6.9% resulted in loans paid off through either a refinance or by selling the home.
  • The remaining 1.3% resulted in repayment plans, short sales, deed-in-lieus or other reasons.

* Sellers should have equity in their home so if they do sell, should be ok. Can even refinance after paying mortgage for 3-6 months depending on your situation. As far as a cash out refinance, the borrower must have completed their forbearance plan AND made at least 12 consecutive monthly payments post-forbearance.

As for inflation and higher mortgage rates, in this case, they were correct. Mortgage rates have gone up and continue to do so.

Zillow December 2021-December 2022 Home Value & Sale Forecast

  • Zillow expects home values to grow 16.4% between December 2021 and December 2022.
  • Existing home sales in 2022 are expected to total 6.57 million in 2022, up 7% from an anticipated 6.14 million sales in 2021.

Zillow is increasing their numbers for home price appreciation to 16.4% from 14.3%  which will make 2022 even crazier than 2021.

Just to give you perspective,  the National appreciation values average around 3.5 to 3.8 percent per year in a normal market. In 2021 the market appreciated around 14.5%. In 2019, the appreciation was 4%.

Zillow also says that Almost 6.6 million existing home sales are expected to close in 2022, up 7% from 2021.

They base their predictions on tight inventory and growing demand.

“The robust long-term outlook is driven by our expectations for tight market conditions to persist, with demand for housing exceeding the supply of available homes. “

They do put out this disclaimer:

“However, downside risks to our forecast remain. Elevated inflation heightens the risk of near-term monetary policy tightening, which would result in higher mortgage rates and weigh on housing demand. The 30-year fixed rate broke above 3.5% this week, for the first time since Spring 2020. Higher rates are exacerbating buyers’ struggles with affordability, and they might dissuade some existing homeowners from moving, by raising the monthly mortgage cost of even those homes priced similarly to their current homes. By dampening both buyers’ and sellers’ appetite in this market, rising rates could drive down sales volumes this year, with uncertain effects on home prices.”

REDFIN says they “Expect Price Growth to Slow, Sales to Stay Flat as Mortgage Rates Approach 4% this Year”.

They also say that home price growth is expected to slow to 7% by the end of 2022.

“Home sales are expected to remain relatively flat throughout the year, similar to the small annual rate of change they have been posting since August due to the ongoing shortage of homes for sale. Redfin economists expect the 30-year fixed mortgage rate to continue to rise steadily to 3.9% over the course of the year”

So, who is right? Real estate is very localized so it definitely depends where you live but here in the D.C. area, our market is heating up. I think we will have a very strong seller’s market this Spring! 

So, if you’re thinking of selling or buying, let’s chat!

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