Zillow Updates 2022 Market Prediction
Zillow updated the market prediction for 2022, and there are housing market statistics to discuss. The United States has now reached the most unaffordable market it has seen in the last 15 years! This is measured by reviewing the affordability index. The affordable index looks at the percentage of income that goes towards housing. This percentage is now at 28%, the highest level since 2007. To put that into perspective, 30% is considered the upper threshold that should be avoided. As a nation on average, we are getting close to that number.
The average monthly mortgage payment now stands at $2,127 per month, which is a 36% increase year to date. We're only halfway through the year but the nation's housing market has already seen a 36% increase. This increase is happening due to the rise in prices and even more importantly; a surge in mortgage interest rates. Home values have also increased 20.7% in May, which was a slight drop from April’s 20.9%.
Zillow additionally decreased its forecast from 10.4% down to 8.8%. In a normal, or regular, housing market, a 3% to 5% appreciation is seen. However, Zillow is still predicting above-average appreciation despite the current rise in interest rates.
Zillow's updated housing market predictions note that inventory is starting to increase since February. I believe the increased inventory is occurring for a couple of reasons. First, the demand for higher price points is dropping since there are increased interest rates and a lack of affordability. Second, the nation is still coming out of the pandemic, and there are more sellers comfortable seeing a slight slowdown in selling. To these sellers, this is an opportunity to tap out and really cash in on equity they have in their homes.
To compare the housing market shifts, take a look at this YouTube video of Zillow updating the housing market predictions back in January of this year.Posted by Matt Curtis on