Where Zillow says home prices are headed in 2022

While the housing market is still very much a seller’s market, things are clearly shifting a bit. More homes are coming on the market, and we’ve seen a big decline in the number of bidding wars.

That said, buyers shouldn’t pencil in a price correction, according to Zillow’s forecast model.

Over the next 12 months, Zillow, an online real estate marketplace, is forecasting an 11.7% appreciation in U.S. home values. While that would mark a slowdown in appreciation—over the past 12 months the typical home has increased 17.7% in value—it would hardly be a relief for priced-out homebuyers. After all, even in this strong labor market, most workers won’t get anything close to an 11% raise next year.

“Home price appreciation is difficult to forecast, but we expect home price growth to slow down from historic highs,” Chris Glynn, an economist at Zillow, tells Fortune. Zillow describes the housing market as transitioning from “white hot” to just “red hot.”

Why does Zillow expect home prices to continue rising? Glynn points to “demand still outpacing supply.”

As Fortune has previously reported, we’re in the middle of the five-year period during which the largest chunk of millennials, those born between 1989 and 1993, are hitting their thirties—the age when first-time homebuying really kicks into gear. The market just wasn’t ready for this influx: After the aughts housing crisis, builders played it safe during the 2010 decade. As a result, the nation is under-built by around 4 million homes, according to Freddie Mac.

That’s not all: The effects of COVID-19 on the housing market—recession-induced low mortgage rates coupled with the work-from-home trend allowing buyers to search deeper into the burbs—are still at play and driving the housing market forward. While inventory is rising again, it’s still well below pre-pandemic levels and simply unable to meet the current demand. Cue higher prices.

There’s no doubt about it: This forecast by Zillow is very bullish. But it’s also a bit of an outlier when compared with other real estate firms’ outlooks. Over the coming 12 months, CoreLogic forecasts only a 2.2% jump in U.S. home prices. For the 2022 calendar year, John Burns Real Estate Consulting and Freddie Mac are forecasting home price growth of 4% and 5.3%, respectively.

We should also emphasize how hard it is to forecast home price growth. At the onset of the pandemic—which saw some states temporarily ban in-person real estate viewings while the unemployment rate soared to nearly 15%—CoreLogic forecast that between April 2020 and April 2021 home prices would fall 1.3%. For that same period, Zillow forecast that prices would fall 2% to 3%. Of course, they weren’t even close: The housing market during the COVID-19 pandemic has been among the tightest and most competitive in U.S. history.