Looking back...

Since I started my career in real estate in 2009, the market has been on a rollercoaster ride. In my early years, 1/3 - 1/2 of homes for sale were distressed properties--short sales, bank-owned homes, bankruptcy sales. These were difficult times for sellers. It took 5 years for values to begin their recovery.

In King County, home values have risen nearly 3x since bottoming out in January 2012. Here's a look at home prices since before the bubble burst in 2007. The red arrow is when I became a real estate agent. :-/

In some ways, the last decade has been exciting for our region. As tech companies grew (Amazon) or migrated to the NW (Apple, Facebook, Google), we've seen incomes and home prices increase rapidly. But we've also watched our city struggle to keep up with the growth. Today's buyers are worried that, if they don't act now, they won't be able to afford a home at all.

Most economists expect the housing market to cool in 2022. Interest rates are expected to rise, which will temper demand. But the real driver will be the number of homes for sale. If supply remains tight, we can expect further price appreciation. If supply loosens up, we may see a more balanced market. After this year's dismal inventory numbers (circled in red below), I'm optimistic things can only improve in 2022.

Inventory will be the key.

Housing market forecasts | 2022

Each year, we round up housing forecasts for the coming year. Here's a look at what experts expect in 2022.

Redfin Predicts a More Balanced Housing Market in 2022

Higher mortgage rates (up to 3.6% at year-end) will end double-digit price growth and new listings will hit a 10-year high (though hardly making a dent in the ongoing supply shortage).
Don’t expect a buyer’s market; just more selection, less frenzy, and slower price growth.
Rents will increase 7% by the end of 2022.
Condo demand will take off.
The iBuying business model will shift from an aspiration for total market domination to a premium service that serves a small segment of home sellers who value convenience over cost.

Matthew Gardner's forecasts for the U.S. economy and housing market in 2022

The Federal Reserve will start to raise interest rates to counteract inflationary pressures.
Mainly due to ongoing supply limitations as well as rising affordability issues, the number of existing-home sales will not increase in 2022.
The pace of home price growth is unsustainable and will taper in 2022. Home values will increase 7.3%.
Mortgage interest rates will begin “stair-stepping” higher throughout 2022 but will end the year below 4% (3.78%).
We should expect to see the housing market start to move towards some sort of balance in 2022, but will remain out of equilibrium until at least 2023.
Housing affordability will be a problem, but demand for ownership housing remains remarkably buoyant and, in fact, it is quite likely that demand may increase as the work-from-home-paradigm gains momentum.

Fortune: The historic run on home prices is set to wind down in 2022

Every 2022 forecast model Fortune has reviewed anticipates that price growth will slow down next year.
The average 30-year fixed mortgage rate, which is currently 3.09%, could rise near or above 4% next year.
If employers actually bring staffers back into the office, that could cut down on homebuying in second-home markets and exurbs.
While announcing this week that it was shutting down its unprofitable home-flipping business, Zillow CEO Rich Barton admitted that his firm isn’t very good at forecasting prices: “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated.”