The hot housing market we saw in 2021 doesn’t appear to be cooling off anytime soon. According to the Zillow Economic Research team, home prices in 2022 will continue to rise, keeping homeownership out of reach for some would-be homebuyers.

Zillow predicts the price of homes will increase 11% in the next 12 months. That’s significantly less than the projected 19.5% increase in 2021, but would still represent one of the strongest years the team has ever tracked.

While not everyone agrees with Zillow’s bold prediction, most industry experts do expect home prices in 2022 to increase – just to a lesser degree. For example, Fannie Mae predicts a 7.9% increase, while Realtor.com predicts just 2.9%.(The Mortgage Bankers Association is the outlier, projecting a 2.5% decline.)

Rents – grew by double digits in 2021 – are also expected to keep rising in the new year as vacancy rates remain at record lows.

Existing home sales are also expected to increase in 2022 as inventory grows (a little – 0.3% is Realtor.com’s prediction), totaling 6.35 million, compared to 6.12 million in 2021.

According to the National Association of Realtors, the supply of homes for sale, which hit an all-time low of 1.9 months in 2020, still sits at just 2.4%. And supply-chain challenges, along with labor shortages, mean new construction is unlikely to keep up with demand. But with more people working remotely, homebuyers can now broaden their parameters – or even relocate entirely – which gives them more options.

Of course, these are all just predictions. Remember that none of these experts predicted the historic home price increases of 2021!

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