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Question #9 for 2022: What will happen with house prices in 2022?

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Today, in the Real Estate Newsletter: Question #9 for 2022: What will happen with house prices in 2022?

A brief excerpt: Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2022. Some of these questions concern real estate (inventory, house prices, housing credit, housing starts, new home sales), and I’ll post those in the newsletter (others like GDP and employment will be on my blog).

I’m adding some thoughts, and maybe some predictions for each question.

If inventory doesn’t increase in 2022, house prices will continue to increase at a double-digit pace. There are several possible reasons for an increase in inventory in 2022. Here are a few:

1. A sharp increase in mortgage rates.

2. Economic problems overseas that spillover into the US.

3. Unregulated areas of finance causing economic problems.

4.Affordability (a combination of higher mortgage rates and higher prices).

A sharp increase in mortgage rates is possible, especially if inflation stays elevated and the pandemic subsides (each wave of the pandemic has pushed down interest rates). And at some point, affordability will start to matter, but in general – with low mortgage rates – houses are still somewhat affordable (see the bottom of this post on affordability). There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/

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