After years of rising annual home price appreciation surpassing even mid-2000s housing bubble benchmarks, prices will finally begin to decelerate during the spring market, Zillow reports. After logging consistent lows throughout the course of the pandemic, housing inventory started an upward trajectory in March, and many experts anticipate that supply levels could see year-over-year growth before the end of 2022.
Higher inventory could prevent sellers from overpricing their home listings in a more competitive market, but prices will likely remain elevated for the near future, particularly as higher interest rates drive up the cost of homeownership.
If prices did begin to fall, we know there are millions of stymied first-time buyers, or younger millennials soon to be aging into that situation, waiting in the wings to snap up homes if they see a bargain. Those first-time buyers will continue to feel the pressure from rising rents, which jumped 17% in just the past 12 months. And a generally high-inflation environment will keep homeownership looking attractive as a hedge against inflation.