With rising interest rates, is our market heading for a crash in 2022?
In 2021, one of the most common questions I received was, “Will the market crash this year?” With hindsight, we know it never did, but now I’m receiving the same question about 2022. I get it; there’s a lot of uncertainty in the world right now, but I don’t think we’re heading for a crash, and today I want to tell you why.
Our current levels of growth are unsustainable, but it’s more likely for the market to level out than completely crash. Current predictions are that home prices will increase somewhere between 5% and 8% by the end of the year. While that may seem small compared to 2021’s astronomical gains, that amount of growth would still be nearly double the historical average.
If you’re a buyer waiting for prices to fall, I’m sorry to tell you that it probably isn’t happening anytime soon. Realistically, the market will cool but only in the sense that it won’t be scorching hot like it was last year. There are two main reasons why we likely won’t see a crash in 2022, so let’s talk about them.
First, interest rates will likely increase to 3.5% or 4%. Rising interest rates aren’t good for the market, but if they only rise to 4%, the effects will be minimal. 4% rates are still historically very low and likely won’t significantly curb demand. Second, our inventory remains at record lows. With high demand and low inventory, a market crash seems very unlikely.
If you are looking to buy or sell this year, my advice remains the same as always. You can’t time the market, so make your move when it makes sense for you both personally and financially.
If you have any questions about today’s topic, please call or email me. I am always willing to help!
