Why Is There High Demand In The Housing Market?

Why Is There High Demand In The Housing Market?

Why is there suddenly such high demand in the housing market right now? With home prices rising over the last few years, it seems counter-intuitive, right? 

Yes. Here are several reasons why the demand for homes is so high right now. 

Home Prices Will Keep Increasing

Just like we talked about in our article about the 2022 housing market, most experts agree that home prices will keep going up this year. 

There is a massive housing shortage which doesn’t look like it will be ending anytime soon. The U.S. population is always growing. Millennials – the largest generation ever born in the U.S. – is now reaching the prime homebuying stage in their lives. The shortage of houses drives up prices as there are few homes to go around. This drives high demand in the housing market.

If you had the option, wouldn’t you like to “ride the wave” of home appreciation? For a lot of prospective homebuyers, there’s a deep FOMO on the rapid home appreciation that’s happening in the market. This drives a deep desire to own a home and start enjoying the growth in equity that homeowners are enjoying in 2022.

Mortgage Rates Are Increasing

This article on CNBC is all about how the Fed raising interest rates is affecting our wallets. They have one section in there around mortgage rates, because rates are going up fast. In fact, the average rate is now 1 point more than it was back in November. 

The Fed is doing this to fight against inflation. The inflation rate from Feb 2021 to Feb 2022 was 7.9%. That’s the highest it’s been in decades and something needs to be done about it. One of the options that the government has is to raise interest rates, which theoretically will slow down the economy and thus, inflation. 

While it’s great that inflation will get under control, it’s bad news for homebuyers. Even the slightest change in your mortgage rate could mean thousands of dollars more in payments over time. It makes sense that a number of homebuyers are trying to buy right now while low rates are still attainable.  

Rent is Going Up

Back in September, CoreLogic reported that rent growth for single-family homes hit a 16.5 year high. In fact, the July 2021 increase was more than 5 times the increase seen in July 2020!

Renters are feeling the squeeze. Inflation is driving up the cost of everything, except their paychecks.. Landlords are raising rents on renters to keep up with the market. 

It does beg the question. Is renting really worthwhile? Why continue to rent? At least if you owned a house, you could benefit from the appreciation in home equity. It is thus not surprising that more people are pursuing homeownership to escape the rising rents. 

Work from Home is Here to Stay

According to this article in Barron’s (along with a lot of others out there), work-from-home life is here to stay. A lot of employees are finding themselves in a hybrid schedule where they only go into the office a few days a week. Others are now fully remote. 

This opens up new doors around the location. Why live in an expensive city if you can live in the suburbs for much less? If you only have to go into the office one day a week, you can deal with that drive – 1 day is much better than the 5 days it would have been two years ago before the pandemic. If you’re going to spend more time indoors, it makes sense to actually invest in your space, and make it your own. It only follows that homeownership would come to mind in such a scenario and further adds to the high demand in the Housing Market.


It’s almost like the perfect storm. Multiple factors play into why there are so many homebuyers and so much housing demand right now. 

That’s even more reason why you need the best southern California real estate agent team backing you up. You want a seasoned agent who’s been on this ride before and  knows the ropes. A great agent can make the difference  and help you win the bidding war.

Give us a call at (949) 238-1107 or send us an email and we’ll help you get that house, regardless of the competition.