It’s widely recognized that there is a shortage of housing supply in various regions across the United States.

This situation has been deteriorating for several years and shows little sign of improvement.

Even with skyrocketing demand, the supply simply isn’t sufficient to accommodate everyone looking to purchase a home.

The result has been soaring prices, making it increasingly challenging for the average person to afford a house.

Some are optimistic that 2022 will deliver a much-needed solution to this crisis. But what practical steps can be taken? And will these efforts yield a meaningful impact?

Will Home Prices Rise in 2022?

If you’re like me, you’ve been closely monitoring the developments in real estate across the nation.

Media outlets are filled with reports of skyrocketing prices and the looming concern of another housing bubble.

It wasn’t so long ago that excessively high home values raised questions about the stability of the housing market.

The thought process was clear: if property values dropped, lenders would face difficulties, potentially leading to bank failures—much like the fallout from the Great Recession.

With unemployment rates at historically low levels, it’s easy to understand why home prices are on the rise. As more individuals are employed, the demand for living spaces increases, pushing up both demand and prices.

But how long can this upward trend in home prices continue? Should you consider selling your property while maintaining equity, or hold on in hopes of higher returns as prices appreciate further?

A recent report from Zillow indicates that home values are projected to keep gaining traction in the coming years.

The Seattle-based real estate platform forecasts an 11 percent increase in home values.

As for rental costs, renters can expect a rise of 2.5 percent during the same timeframe.

Housing Market Predictions for 2022

The housing market frequently dominates discussions— and rightly so, given its considerable impact on the broader economic landscape.

So, what can we anticipate for the housing market this year? Here are several predictions I believe will shape 2022.

1. Home Value Growth Will Accelerate

As referenced earlier, home values are set to increase by 11% annually throughout 2022.

This suggests that if your household income doesn’t rise by at least 2% each year, it might make more financial sense to wait until 2024, when the market may stabilize and homes could become less expensive.

2. Secondary Cities in Growth Areas Will See Rapid Price Increases

From my observations, secondary cities might emerge as attractive investment hubs once major cities hit their price ceilings.

To determine which locations qualify as secondary cities, one must consider the proximity to primary urban centers and accessibility to undeveloped land.

3. More Gen Zers and Millennials Will Purchase a ‘Second Home’ Before a Primary One

The trend of individuals choosing to buy a secondary home prior to settling down and moving out is expected to rise in 2022.

With a sizable population of Gen Zers and millennials entering the market, ‘empty nesters’ will be competing in the real estate arena, which could drive prices even higher.

Should You Buy a Home Now or Hold Off?

If you’re contemplating purchasing a home in the near future, it’s essential to weigh all variables before making a decision. Personally, I believe buying a home now can be a wise choice. Why is that?

• Home Prices Are Rising

Despite the housing correction experienced in the past, home prices have been consistently on the rise for several years.

Given the high demand for homes in numerous areas, finding a favorable deal may prove difficult.

• Homes Will Become Less Affordable as Prices Continue to Climb

As long as demand remains robust and interest rates increase, homes will only become pricier over time.

Although home affordability has recently reached a low point not seen in years, it’s unlikely that this will remain the case if prices keep escalating.

Conclusion

If you’re like most consumers, you might be thinking, “Hey, it’s already 2022! Where’s my flying car?”

While the future may not have fulfilled all our expectations just yet, one thing is clear: the housing crisis isn’t dissipating.

In the face of surging demand and population growth, the pace of new housing construction continues to lag behind, creating an ever-widening gap in affordability.

So, what can be done to tackle this pressing issue? Unfortunately, there aren’t any straightforward solutions.