Real Estate 2022 Predictions, Inflation, and Home Values. How does a person actually make predictions about the housing market?  Most importantly how will the historic changes in the overall economy (and inflation) affect you and your real estate business? There are 6 major factors that affect the Housing Market predictions: Demand Supply, also known as Inventory Affordability Interest rates Enthusiasm for real estate, (the American Dream) is here to stay. Inflation and appreciation, mixed together but inflation prevailed.  Definitely not ‘transitory’. Let’s circle back to the top of the list and understand each piece as relates to today’s market conditions: Important: 2022 Top Agent Success Secrets [Revealed]: New FREE Real Estate Coaching Web Event, Revealing 17 Surprising Secrets Of The Top 100 $ Millionaire Agents. Get Your FREE Spot For The 2022 Real Estate Coaching Webinar Now. After You Have Attended This Event You Will Have A Huge Feeling Of Relief Knowing You Will FINALLY Laugh At Your Money Worries – You Will Have Your Own Personalized 2022 Step-By-Step Business Plan. Learn Now How To Generate 100’s of Motivated Leads for FREE, Without Coming Off As A Pushy Salesperson and Losing Your Soul. You Will Soon Know How To Become One of the 1000s of Agents Making HUGE Money Who Never Thought They Could. https://timandjulieharris.com/webinar-reservation.html How do supply and demand relate to pricing? Factor #1:  DEMAND simply means: the number of people who want to buy a house. 1-investors, big, small, and institutional. 2-millennials at peak home-buying age: early to mid-’30s. 3-family formation: growing families.  This is known as ‘fundamental demand’. 4-huge amount of people who are coming up under the 30-somethings. Thus, demand is both high and stable.   When there is high demand, prices go up.  There’s not enough to go around, so the market is competitive, favoring sellers.  This is how the market has been since about 2010 when the enthusiasm heated back up, rates started to consistently fall and scarcity of listings became a theme. When there is low demand, prices stay stagnant or sometimes fall.  This is when there is one buyer for each listing (balanced) or fewer buyers than listings (a buyer’s market).  This is when the buyers have more control. Did Covid spike demand?  Definitely.  However, the Mortgage Banker’s Association shows increasing demand within the past 5 years, even without Covid. Covid made for some ups and downs but demand has returned to what it would have been without Covid, based on previous charts and graphs of demand trends.  Normal demand, post-Covid means that demand is staying stable with some additional increase. The housing market will continue to appreciate as a result. Factor #2:  Supply, or :  INVENTORY: 4-5 million homes short of demonstrated demand.  Inventory has a long way to go. Why is inventory so low?? 1). Housing starts (# of homes being built).  Was huge until the recession/housing crash.  Builders were building more than the demand was. 2)  Housing Crash: builders simply quit building…abruptly, about 2009/2010. 3). We are nowhere near the ‘speculative building’ we saw before the housing crisis. 4). Continuing at this rate, it could take a decade to make up for the missing 4-5 million homes. Could construction accelerate? Maybe, but then it’s ‘only’ 5-8 years to get there. 5). Some estimate that 30% of the shortage can be attributed to VRBO, HomeAway, Airbnb, and other short-term rental sites.  Those possibilities didn’t exist until fairly recently, certainly not at the scale of today.  Empty nester/baby boomers are keeping their homes and turning them into rentals in the most popular markets.  Less inventory as a result.