The long-awaited recession finally occurred in 2020. The pandemic was the match that lit the fuse on the time bomb of an economy that many experts say was already overdue for a downturn. So, where does that leave the housing market? Will it weather the storm or will it succumb to the pressure? Let’s take a look at some of the leading indicators to see if we can get a sense of where things are headed.
One of the most important things to consider when trying to predict the future of the housing market is employment. After all, people need to have jobs in order to buy homes. The good news is that, so far, job losses during this recession have not been as severe as they were during the Great Recession of 2008-2009. In fact, many industries are actually hiring right now. The bad news is that unemployment is still predicted to rise in the coming year before leveling off and beginning to improve in 2023. So, while employment isn’t currently a major concern, it could become one in the next year or so.
Another factor to consider is mortgage rates. Historically low rates are one of the things keeping the housing market afloat during this recession. If rates were to increase significantly, that could put a real damper on things. However, rates are expected to remain low for at least the next few years, which is good news for those considering buying or selling a home.
The final piece of the puzzle is housing inventory. Low inventory has been a problem for several years now and that trend is expected to continue into 2022. However, there is some hope on the horizon. According to Realtor.com, “new construction starts [are] expected to pick up in 2021 and gain even more steam in 2022.” That should help alleviate some of the pressure on prices caused by low inventory levels.
So, what’s the verdict? Will 2022 be a good year for buying or selling a home? While no one can say for sure what will happen in any given year, all indications point to yes—the housing market should survive this recession and rebound nicely in 2023. So if you’re thinking about making a move, it looks like you won’t have too much longer to wait.