Last year’s season was one for the books with fewer houses on the market and incredibly high demand for homes — forming the perfect storm for raised home prices and bidding wars. Sellers received around $85,000 more than the asking price and statistics show 70% of homes were in bidding wars. 

To survive the 2022 spring housing market and still be sane by the end of it, learn what is causing it and what to expect. 

What is Causing the Frenzy? 

The culprit of the home frenzy is said to be the drop in homes for sale. Why are more homes not on the market?  Two main factors; 1. Many people have less of a need to sell 2. The labor shortage has made building new homes difficult. 

No One is Moving 

The pandemic has made little need to move because more jobs are going remote. This has also been affecting the commercial real estate market because companies do not require office space to operate. 

More boomers are keeping their homes longer. Some may argue that this is due to economic uncertainty but no matter the reason, the older generation is not willing to part with their homes yet. 54% of homeowners nationwide are 55 or older so by not selling they are limiting the growth of the housing market.  

Labor Shortage 

There are not enough builders to keep up with the demand for new homes. Combined with delays in training courses due to the pandemic, the housing market is hit with a double whammy. 

The builders that are making homes have had to slow down production due to the price of building materials exponentially going up. The price of lumber for board feet has risen 254% resulting in many projects being canceled or delayed. 

Expectations for the U.S Spring Housing Market

Prepare yourself now, people are saying this could be the hottest season ever— a scary thought for those buying, and a dream for those selling. 

Competition 

Inventory is lower than it was last spring with rates down 30% in 254 housing markets. This means competition for a home might get worse. Expect bidding wars and houses going under contract fast. 

Home Prices 

Even Zillow, an online real-estate marketplace, underestimated the 2022 spring season. With initial assumptions that home prices would lower by 11%, they corrected themselves in February. They now believe that this May could set an all-time year-over-year rate record of 21.6% for home prices. 

Increasing Mortgage Rates 

Mortgage rates are rising in 2022 which is only making things harder for buyers. One benefit is that it could help to slow down the frenzy. Experts in the housing market are estimating that mortgages will go up this year anywhere from 3% to 4%. Increasing inflation rates is said to be one of the causes for this. 

Is It a Good Time to Sell? 

It is a great time to sell. If you are thinking of selling your home, this is the season. A market like this is rare to come by for sellers. There are people practically on your doorstep begging to buy your home at top dollar. In 2021, homes spent an average of 47 days on the market before selling and it is only expected to get shorter. 

Is It a Bad Time to Buy? 

Many Americans don’t think this is a good market to purchase a home in. 70% of respondents in a report done by Fannie Mae believe that it is a bad time to buy a home. High competition, hefty home prices, and increasing mortgage rates are influencing some people to run away from the spring housing market. 

Is The Market Likely to Crash? 

There is no forecast for the housing bubble to pop anytime soon, especially not in 2022. A primary condition needed to make the market crash is for less demand in homes. With fewer homes available, it would take a miracle for the demand to go down. So if you are waiting for homes to reduce in price, you will have to be very patient. 

If you are a buyer this season, stay safe, it is a jungle out there.

 If you are a seller this season, make sure your bags are packed, you’ll be out fast. 

 If you are an American just hoping everything calms down soon, hang in there.