The current housing market’s uncanny resemblance to the 2007-08 pre-crash housing bubble has some experts concerned about a similar fate in 2022, but as affordability continues to decline, so too will home sales, Realtor.com reports. The 2007 housing bubble was characterized by unprecedentedly low mortgage rates, but this time around, the 30-year fixed-rate mortgage is soaring to its highest point in over a decade as buyer demand continues to outpace new housing supply.
To make matters worse, inflation is also driving up costs for consumer goods like gas and food on top of already elevated housing prices, which are only expected to rise. Nonetheless, home price growth is gradually decelerating, and as more buyers are priced out of the housing market, sellers will continue to lower their rates to meet demand halfway.
“What causes home prices to fall is being swamped [with homes for sale],” says Greg McBride, chief financial analyst at Bankrate.com. He expects prices will eventually flatten out and stay put for the next few years. “[Instead] we’re at record low record levels of supply.”
There will also likely be buyers as well as investors who can afford the higher rates, or are buying in cash, who will keep the housing market strong.
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