Is There A Housing Shortage Coming?

Forbes predicts a nationwide housing shortage during the rest of 2022. Is there a housing shortage coming?

KEY TAKEAWAYS

• Forbes predicts a housing shortage.
• Read what happened to the housing market in July.
• What will happen to home prices in summer 2022?
• What are the housing inventory predictions for the rest of 2022?
• The housing shortage in 2022
• One expert predicts housing shortage eases as listings surge in June 2022
• Will the housing market crash in 2022?
• What effect will more millennials buy homes in 2022?
• Should you buy a home now or wait?

 

Housing Market Forecast for the Rest of 2022

Forbes, on July 1, 2022, predicted that “rapidly rising mortgage rates” during times of low inventory with fervid competition and large price gains make it difficult to buy an affordable home.

Higher mortgage rates mean many buyers can’t afford as lavish homes as a few years ago. Thus, buyers must wait for more inventory to become listed for sale or move to a more affordable vicinity.

Oher buyers will wait for mortgage rates to drop. Yet, Forbes predicts it won’t happen soon. Especially since the Fed promised another interest rate hike.

 

What Happened to the Housing Market in July 2022?

 

Forbes claims the national housing market rose by more than 20% last April from the same time last year. Now that mortgage rates increased last month adding to the cost of buying a home, expect higher costs.

The problem is that rising purchasing costs puts “pressure on the housing market.” This caused the fewest mortgage applications nationwide to buy or refinance in the past 22 years, according to the Mortgage Bankers Association (MBA).

 

What Happens to Home Prices in Summer 2022?

Forbes claims that high housing demand, inflation, and low supplies continue to raise costs. They predict existing homes’ median sales price appreciation to be around 6.6% which is more than double their last prediction for the rest of 2022.

As of July 18, 2022, the national average rate of a 30-year fixed mortgage was 5.85%. This is a large hike from the average of 3.2% at the start of the year.

This bump in rates causes the housing market to falter since more people can’t afford to buy homes. This marks the fourth month in a row that existing home sales dropped.

 

What Are The Housing Inventory Predictions for the Rest of 2022?

 

Some economists predict the number of homes for sale will increase. This will force buyers to consider other options like lowering their expectations and seeking fewer needs and features. Make do with what they can afford.

Budget priorities will change the way buyers look for new homes. Some desiring a single-family home may opt for a condo or a townhouse.

 

The Housing Shortage in 2022

 

The Up For Growth site on June 2022 claimed: “America is experiencing a housing crisis.” Caused by housing underproduction.

Since 2012, the number of homes short of meeting housing needs doubled by 2022 to 3.8 million. This is caused by people migrating to search for jobs and economic opportunities. This created a housing demand in the most economically productive regions in America.

Julian Castro, former U.S. Secretary of Housing and Urban Development (HUD) from 2014 to 2017 claimed: “Our nation faces a severe housing affordability crisis that urgently requires investment in housing supply.”

Pamela Hughes Patenaude, Former United States Deputy Secretary of Housing and Urban Development from 2017 to 2019 claims: “The acute shortage of homes, both for rent and sale, is the main driver of today’s housing affordability crisis.”

Thus, both former HUD officials are raising the alarm about the current housing shortage in the U.S.   

The New York Times on July 14, 2022, also claims that “The Housing Shortage Isn’t Just a Coastal Crisis Anymore.” This is a national problem negatively affecting the American quality of family life.

 The NPR on July 14, 2022, proclaimed: “There’s a massive housing shortage across the U.S.”

 

One Expert Predicts Housing Shortage Eases as Listings Surged in June 2022

 

CNBC on June 30, 2022, claims the housing shortage is ending. They claimed that the “Housing shortage starts easing as listings surge in June.”

The CNBC story backs up their claim with the following facts:

• The housing inventory jumped 19% higher than the same time a year ago although the overall inventory is only half of the pre-COVID levels;
• The June median listing price hit a record high at $450,000; and
• Costs of ownership for a median-priced home in the second quarter of 2022 required 31.5% of the average U.S. wages, the highest since 2007 up from 24% the year before.

CNBC concluded by stating: “A historic housing shortage brought on by the one-two punch of slow construction and strong pandemic-induced demand is finally starting to ease.”

 

Will the Housing Market Crash in 2022?

Better Homes & Garden on June 6, 2022, took a different view. Will the housing market stay hot or will it cool off?

The Better Homes article pointed out that historic low mortgage rates with the pandemic keeping many people working from home created a red-hot housing market in early 2022. High demand and a low supply led to a hot market. According to a Redfin report 54% of homes sold above the list price.

Yet, that was before the large mortgage rate hikes in early summer. Now that the costs for buying a home jumped overnight will prices come down later in 2022?

They may, but more importantly, don’t expect a housing market crash in 2022 because they lack inventory. Low inventory means less effect on the total housing market. If they crash it won’t be like 2007 and 2008 when more homes crashed.

The rising mortgage rates actually may balance the rising home prices. Fewer buyers usually mean lower prices.  

 

Got Questions?

 

What Effect of More Millennials Buying Homes in 2022?

 

In 2021, more millennials entered the market for the first time. The trend is expected to continue in 2022. This should keep the U.S. housing market stimulated for many years.

Boomers are also worth watching as they make up 75% of the housing market according to U.S. census data. They can capitalize on their home equity gains over the years.

 

Summer 2022 Housing Market Forecast

 

Bankrate on June 6, 2022, published a report predicting the 2022 summer housing market.

The outlook is mixed depending upon which experts you contact.

Some predict the recent higher mortgage rates will create less buyer demand which will lower prices. Yet, higher mortgage rates with a lack of inventory will keep many from buying. Sellers who need to sell will lower their prices. Yet, sellers who don’t have to sell quickly will hold out for higher prices.

Other experts see buyers locking in current rates to avoid paying higher ones later. The current high mortgage rates will freeze out border line financially people. Buyers willing and able to buy a home will see less competition as a motive to purchase.

 

Should You Buy a Home Now or Wait?

 

Buying a home is usually the highest personal decision for the average American. After all, it’s usually the largest single purchase in one’s lifetime.

Use this free online Mortgage Calculator to see how much of a home you can afford.

 

Is There A Housing Shortage Coming? – Conclusion

 

It’s never easy to predict housing market trends. Experts differ about is there a housing shortage coming?

Forbes predicts that rising mortgage rates during a period of low inventory means many potential buyers won’t afford their dream homes. This will force many to wait for rates to drop. Since the Fed is expected to make more interest rate increases, Forbes predicts the only option is to move to more affordable neighborhoods. Here’s what we found:

• Higher mortgage rates already caused fewer people to apply for a mortgage or to refinance. This puts more pressure on the housing market;
• The current median mortgage rate is 5.85%. This will cause the housing market to falter since more people can’t afford to buy homes;
• Yet, some other experts think housing inventory will increase later in 2022. If correct, the buyer will see more opportunities to downgrade their ideal home from a single-family house to a condo or a townhouse;
• If you are undecided whether to buy a home now or wait, use the free Mortgage Calculator to see what you can afford;
• Other experts predict a larger housing shortage by the end of 2022;
• Contrarily, CNBC claims the national housing shortage is ending;
• Most experts do not predict a housing market crash in 2022;
• Millennials are expected to buy more homes in 2022 while boomers are worth watching with all the equity they have in their current homes; and
• Bankrate is confused by the differing opinions of experts about what buyers will do about rising mortgage rates. Also, sellers who must sell will lower their prices while other sellers will hold out for a higher price.

 

Are You Ready To Buy a Home in San Diego County?

 

Big Block Realty offers experienced Realtors to advise you whether you want to downgrade your ideal home to an affordable option or can afford to buy your dream home now. San Diego County offers listings on the beach, downtown, suburbs, or rural areas with many options to choose from.

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The Wall Street Journal partnering with Real Trends Rankings.

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Check out our two blog posts verifying our awards with screenshots and links sources:

“Big Block Realty Named in Top 100 RE Brokers in The United States”; and

“Best 100% Commission Real Estate Broker San Diego 2022”

 

Contact us today before spending valuable time looking for a home in San Diego County. Our Realtors can find your ideal home or an affordable option quicker than doing it yourself.

 

 

Steven Rich, MBA – Guest Blogger

 

 

 

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