Housing Market Definition Price & Prediction 2022

Housing Market Price
Housing Market Price

Housing market is a network of sellers offering homes and a network of buyers wanting to buy homes.

The Housing Market is the supply and demand for dwellings in a certain country or region. The average and trend in home prices are important components of the housing market.

What is the Housing Market?

The housing market is the market for homes that are acquired and sold directly to purchasers or through real estate agents.

The housing market, also known as the real estate market, brings together various stakeholders, including homeowners selling their properties, renters, real estate investors buying and selling properties solely for investment purposes, contractors, renovators, and real estate brokers who act as facilitators in the process of buying or selling a property.

Demographic variables are the primary determinants of demand in the housing market. However, other factors like as income, financing availability, and customer preferences are also relevant.

Demographic aspects include market size since the more customers there are, the higher the demand, as well as the rate of weddings, divorces, and deaths, which indicate population increase.

Let’s have a peek.

Example

Jeremiah is a property investor.

He enjoys investing in REITs (Real Estate Investment Trusts), which allows him to participate directly in the ownership and financing of real estate developments.

Jeremiah produces an Excel spreadsheet to compare the returns of REITs to the S&P 500, Dow Jones Industrial, and Russell 2000 indices.

In one year, REITs returned 27.15%, outperforming the S&P 500 (6.05%), Dow Jones Industrial (5.80%), and Russell 2000 (4.80%).

REITs returned 20.14% over three years, slightly higher than the Russell 2000 (19.21%) but much higher than the S&P500 (7.06%) and Dow Jones Industrial (6.79%).

Small caps appear to outperform the market over the long term, with the Russell 2000 Index returning 70.98% and 61.03%, respectively

However, REIT returns are once again much greater than the S&P500 and Dow Jones Industrial in both the 5-year and 10-year time periods.

Jeremiah will continue to invest in REITs, particularly those with strong dividend yields.

On the other side, there is a favourable relationship between REIT performance and the geographical sector in which they trade.

REITs may be sensitive to exposure in developing markets or big economic cycles in this setting.

Definitions Related to Housing Market
  • UK nominal property prices – (real monetary worth) that have not been adjusted for inflation
  • Real home prices – prices adjusted for inflation; for example, if prices climb 10% but inflation is 2%, real house prices rise 8%.
  • Mortgage equity withdrawal – when a homeowner remortgages their home and withdraws equity.
  • Affordability index – the percentage of disposable income required to cover mortgage and rent payments.
  • Buy to let – When an investor purchases a home with the goal of renting it out and presumably profiting from capital gains.
  • Capital gains – occur when investors observe an increase in housing values.
  • Negative equity – occurs when a homeowner’s outstanding mortgage exceeds the home’s worth. They would still owe money from the first mortgage if they sold their property.
  • Real interest rates – nominal base rates minus the inflation rate
  • Base rates – the interest rate established by the Bank of England; this base rate has a significant effect on the economy’s other interest rates.

In most cases, banks will adjust their lending rates in reaction to changes in the base rate.

  • Fixed-rate mortgage – a mortgage in which the interest rate is fixed for a given number of years, such as 2, 5, or 10 years.
  • Variable-rate mortgage – a mortgage in which the interest rate is tied to the Bank of England base rate, causing mortgage payments to fluctuate when the interest rate fluctuates.
  • Interest-only mortgage – When a homeowner obtains a mortgage, they just pay the interest on the loan and do not pay any principle to reduce the outstanding amount.
  • Generation rent – young people who cannot afford to buy but must rent.
The Housing Market includes the following features
  • Housing supply – the number of housing stock
  • Housing demand – house prices
  • The rented sector.
  • Government interference in the housing market
  • Buy-to-let investment and tenant demand
Factors Which Affect the Housing Market
  • Interest rates – which impact variable mortgage costs.
  • The state of the mortgage business – influences whether people are qualified for mortgages.
  • Economic growth, income, and unemployment rates.
  • Demographic and population trends
Features of UK Housing Market
  • The UK Housing Market is frequently turbulent due to a variety of causes.
  • The UK Housing Market has an impact on the larger economy. For example, as property values decline, consumer spending tends to fall.
  • Because the housing market effects the economy and individual homeowners, it is critical to attempt to forecast future housing market fluctuations.
Homeownership Rates
  • Homeownership (either outright or through mortgage) is the most common kind of home tenure.
  • Private renters – persons who rent from private landlords
  • Social renters – people who rent from local governments and housing organisations
Affordability of Housing

The percentage of take-home pay that goes toward a mortgage/rent is one indicator of affordability.

This demonstrates that house affordability dropped in the late 1990s as interest rates rose.

Housing Market Crash

The housing market looks to be accelerating as property prices continue to rise—the national median listing price increased by double digits in April, reaching $341,600.

Despite the 19.1% increase in mortgage rates from a year ago in April, buyers are not backing down.

As additional evidence show that the housing market is on an upward trend, many people are questioning if we are approaching a housing bubble.

Will the market implode or at the very least deflate in the near future? Forbes Advisor polled over a dozen housing specialists to determine their predictions for the home market over the next five years.

While most analysts predict homeowner demand to remain strong, there are some signals that home prices may begin to fall due to growing inflation and geopolitical uncertainties.

Are We Headed Into a Housing Bubble?

In a blog post published at the end of March, the Federal Reserve Bank of Dallas found symptoms of a “brewing U.S. housing bubble.”

Though the sharp increase in home prices does not necessarily indicate a bubble, the report notes that “shifts in disposable income, the cost of credit and access to it, supply disruptions, and rising labour and raw construction material costs are among the economic reasons for sustained real house-price gains.”

When “there is widespread assumption that today’s significant price rises will continue,” the Dallas Fed research concluded, the housing market becomes “unhinged” from those fundamentals. “Purchases motivated by a ‘fear of losing out’ can push up prices and heighten expectations of substantial house-price rises if many purchasers share this idea.”

Despite the fact that the present housing market was described as “abnormal,” the authors concluded that “there is no anticipation that the consequences from a housing correction will be equivalent to the 2007-09” crisis in terms of scale.

“Household balance sheets appear to be in better health, and excessive borrowing does not appear to be supporting the housing market bubble,” the research stated, adding that market players and regulators are better prepared with tools and early warning detectors to avert such a collapse.

Housing Market Predictions 2022

Many real estate experts advise purchasers not to try to timing the market during this moment of economic turmoil.

“Whether to buy now or wait will be determined by the individual buyer’s motivation and situation.”

“Waiting may not be an option,” says Krista Forsberg, a Keller Williams Realty agent in Edina, Minnesota.

“Even if a buyer can postpone their purchase until later this year or 2023, there is unlikely to be a major improvement in pricing or financing rates.”

Housing specialists say they are keeping a close eye on the economy, which is being pushed in many different ways by factors like as inflation, increasing gas costs, the Ukraine war, and Covid-19, to mention a few.

While housing has been the star of the US economy in recent years, there are indications of wear, such as rising interest rates making it more difficult for purchasers to find affordable property.

According to the National Association of Realtors, existing-home sales fell 5.9% from June to July, marking the sixth consecutive month of declines (NAR).

The median sales price fell somewhat to $403,800, although it is still about 11% higher than the previous year.

Will Home Prices Continue to Rise?

Housing affordability is being eroded by inflation, high mortgage rates, and record-high property prices.

According to Zillow, the average monthly mortgage payment is 76% more today than it was in June 2019. And wages aren’t keeping pace with rising prices.

Wages climbed 5.2% in July compared to the same month last year, below inflation’s 8.5% gain.

MBA experts believe that property prices will not decline in the foreseeable future.

They predict a 9.9% annual increase in prices in 2022 over 2021, and a 3.1% increase in 2023.

U.S. Housing Market News & Trends

The housing market in the United States is changing dramatically.

Everything from home market values to foreclosure rates is in upheaval as the government strives to combat inflation with increased interest rates.

Now that the Fed has officially indicated that it will continue to raise interest rates in order to battle inflation, let’s take a look at the most recent housing market news and trends affecting the national real estate sector:

  • Home Prices: In only a decade, housing market prices have gone from one extreme to the other. Exactly 10 years ago, property values in the United States were approaching their lowest point during The Great Recession.

Since then, the median house value in the United States has risen by 113.0% and continues to set new records. To be clear, the greatest rate of appreciation occurred during the epidemic.

Housing market prices have risen by 40.6% on average over the last two and a half years. Housing market prices have risen 18.2% in the last year. Prices will almost certainly continue to rise in the future. At the very least, the same factors that have drove up prices in the past are still in play.

Price increases will be driven by supply and demand limits, but rising interest rates will impact on mortgage applications and reduce demand.

As a result, prices will rise more slowly than the market has been accustomed to.

  • Mortgage Rates: After years of record low interest rates, the average 30-year fixed-rate mortgage commitment rate is rapidly climbing.

30-year mortgage rates have more than quadrupled in 2022, after dropping to as low as 2.68% as recently as in December to stimulate activity in the home market.

Rates have risen to 5.66% in order to battle inflation and decreasing demand. Despite much higher rates, it is reasonable to expect borrowing costs to grow further in 2022 and beyond.

If nothing else, the recent Consumer Price Index (CPI) Report revealed the highest pace of inflation in the United States in almost 40 years.

Inflation climbed by roughly 9.0% year on year, which suggests that future increases in mortgage rates may be required to bring down inflation of the US currency.

  • Inventory Levels: Mortgage applications have declined as a result of recent rate rises and the imminent possibility of a recession. According to the most recent Mortgage Bankers Association data, mortgage applications fell 3.7% from the previous week, continuing a pattern that began in the third quarter. Fewer purchasers have reduced competition and increased home availability. At the same time, current homeowners are less likely to sell.

Few homeowners are prepared to sell their houses and swap a lower mortgage rate for a much higher one. The unusual convergence of these variables has resulted in a slight increase in supply.

Despite the fact that house sales are down about 16.8% year on year, inventory levels are actually increasing. Despite the rise, the United States still has fewer than three months of supply, which is well below the six-month norm established by balanced markets.

  • Rent Prices: In the United States, the typical rent for one- and two-bedroom apartments is around $1,388. Rents are rising at a slower rate than last year.

Rent rises in the first three quarters of 2022, on the other hand, are comfortably outperforming pre-pandemic levels. To put things in context, national rents have risen 7.2% year to far.

Rents have already risen 14.8% at this period last year. Year-over-year rental rate rise is about 10.0%, indicating a decreasing trend from a peak of 18.0% at the start of the year.

Rents, like home prices, will continue to rise for the remainder of 2022. However, unlike property prices, the rate at which rentals rise may accelerate. Rents will rise as more individuals choose to rent rather than buy in order to avoid rising housing prices and mortgage rates.

  • Filings for Foreclosures: The national foreclosure rate is gradually returning to pre-pandemic levels. While still much lower than in the previous 10 years, foreclosures are on the rise.

During the first six months of the year, a total of 164,581 U.S. properties went into foreclosure.

At such rate, foreclosure filings are up 153.0% from a year ago but down a far more modest 1.0% from two years ago.

If foreclosures continue to rise at their present rate and the dollar continues to lose purchasing power, it is realistic to expect us to return to normal levels in the first half of next year.

White House Black Market

White House Black Market is a Fort Myers, Florida-based American women’s apparel business. The multichannel retailer focuses on luxury apparel and was founded in 1985.

White House Black Market owns and runs a number of apparel and accessory stores throughout the United States and Canada, where they sell shirts, dresses, skirts, pants, jackets, outerwear, shoes, jewellery, and accessories.

White House Black Market has been a part of Chico’s FAS since 2003.

Housing Market Predictions for Next 5 Years

The strong real estate prediction for the next five years is underpinned by the expectation that tight market conditions would prevail, with demand for houses outpacing available supply.

Despite falling buyer confidence that now is a good time to buy a home, the number of families interested in becoming homeowners remains strong.

This is especially true for younger homeowners, many of whom are first-time buyers who are trying to save for a down payment as rents continue to rise to record highs.

At the same time, seller expectations for greater down payments appear to be rising, pushed by a still-competitive housing market and repeat purchasers with substantially more accessible equity.

The housing market is unlikely to transition from a seller’s market to a buyer’s market anytime soon. Rising mortgage rates may sap some of the market’s vigour, enabling inventories to expand modestly.

It would also decrease the rate of house price rise, reducing the likelihood of a red-hot housing market leading to an overheated market.

According to industry analysts, the supply of available houses is so limited that even a large decline in demand owing to rising loan rates would not change this into a buyer’s market.

Home prices will continue to grow because there aren’t enough houses to match demand, but the combination of rising home prices and high mortgage rates means fewer people will be able to buy.

Price increases would continue, inventory would be scarce, and demand would be strong.

Some markets will appreciate at a slower rate than others, with the Sunbelt performing particularly well.

Even in some of the country’s most costly cities, tier one markets, home prices do not appear to be reducing.

According to CoreLogic, these big cities’ prices increased in February, with Phoenix leading the way at 30.4% year over year.

Las Vegas came in second with a year-over-year price increase of 26.5%, followed by San Diego (25.2%).

Now that mortgage rates have surpassed the 6% mark, Capital Economics, a global research business, estimates that the U.S. home price surge will likely slow in 2023, rather than this year.

According to Capital Economics, the US housing market would witness a 5% decline in home price growth by mid-2023, followed by a “gradual return” to a 3% annual price increase by the end of 2024.

It’s a huge study that comes as the housing market in the United States continues to change, with rising mortgage rates pricing out or deterring potential buyers.

However, the business does not anticipate a spectacular “price collapse” or a housing bubble burst akin to the one that occurred in 2006, triggering the global financial crisis and the Great Recession. A 5% drop would undoubtedly result in a price decline, but it would not lead property values to spiral out of control.

Remember that housing prices have been slowly rising for some years and skyrocketed during the COVID-19 outbreak. A price decline is notable, but in the broader scheme of things, it is insignificant.

Prior to the 2006 housing bubble, the housing market in the United States was predominantly sustained by extremely risky bank lending practises that created a synthetic demand for housing, allowing individuals who could not afford to keep their homes to purchase them. Analysts believe that today’s market does not have the same circumstances.

Analysts believe that today’s market does not have the same circumstances. According to Capital Economic, mortgage rates would rise to 6.5 percent by 2023.

According to Matthew Pointon, a senior property economist at Capital Economics, assuming home price growth follows our prior estimates and falls to zero by mid-2023, mortgage payments would stay higher than their mid-2000s peak until the end of the decade.

Mortgage Rates Housing Market

The current average rate for the benchmark 30-year fixed mortgage is 6.55% on Sunday, September 25, 2022, up 27 basis points in the previous seven days.

If you want to refinance, the current average 30-year refinancing rate is 6.55%, up 27 basis points from last week.

FAQs

Is White House Black Market closing in Canada?

White House Black Market shuttered all of its Canadian outlets during the COVID-19 epidemic, and Chicos FAS Canada declared bankruptcy. They will leave the Canadian market permanently in September 2020.

When will the housing market crash in 2022?

Economists, on the other hand, do not believe it will.

According to housing analysts, there are five major reasons why the market will not fall anytime soon: limited inventory, a shortage of new-construction homes, a significant number of new purchasers, rigorous lending criteria, and a decline in foreclosures.

Are California house prices dropping?

The statewide median house price in August was $839,460, a 0.7 percent increase from July and a 1.4 percent increase from August 2021.

In August, statewide house sales were down 14.9 percent year to date. More than two-thirds of all California counties saw a rise in median prices year over year.

How is the housing market right now in Florida?

Florida Housing Market Overview – Home prices in Florida were up 16.4% year on year in August 2022, selling for a median price.

The average number of properties sold was down 17.9% year over year, with 35,100 sold in August this year, compared to 42,762 sold in August last year.

Is it worth buying a house in the Bay Area now?

The San Francisco Bay Area is a wonderful place to buy land in 2020 and beyond. In the San Francisco Bay Area, real estate values set a new high in 2018.

In particular, San Francisco’s median housing price has fallen by 11.5 percent since its peak in early 2018. The wonderful part about buying now is that you didn’t buy at the peak of 2018!

What is Housing Market Bubble?

A housing bubble, also known as a real estate bubble, is a rapid increase in home prices caused by demand, speculation, and reckless expenditure that eventually leads to a crash. Housing bubbles often begin with a spike in demand due to limited supply, which takes a relatively long time to refill and increase.

Is Seattle housing market cooling?

The housing market in the Seattle region continues to cool. More houses are on the market, waiting for a buyer.

Buyers are signing fewer contracts. And prices are falling quicker than normal, as a regular summer slowdown collides with increased loan rates, priced-out buyers, and economic uncertainty.

Is Seattle housing overvalued?

Seattle, WA has one of the most overpriced housing markets in the country. Demand for houses has surged dramatically in 2021, affecting prices.