What was it like to buy a home in 2022? This post by our CRO explains the state of the market as it was in that tumultuous year.
In the media, the onset of 2022 feels like an intense race against time as interest rates continue to rise since last year. But what is the truth about home buying in 2022? Is it time to panic about these numbers? Who is the most affected, and can regular buyers still find an affordable home in 2022?
Overall, the effects of these trends are going to be more painfully felt by investors and those who participate in the market at scale. When it comes to Brian in Phoenix who is planning on selling his house and buying a new one in the next four months, it’s not the end of the world.
What does the buyer Brian need to know about all the scary stuff he hears in the news that sounds so urgent? Let’s take a deep breath and look at these rising rates and home values pragmatically. What are the pros and cons of buying a home in 2022, and is it the right time for you?
Those Real Estate Headlines
It’s everywhere in the news — rates are scheduled to climb three times this year. On top of that, the market has seen an average rate increase of 0.125% per week since Thanksgiving 2021, telling buyers that they risk getting priced out of the market the longer they wait.
Home prices also continue to rise an average of 1.8% per month — 18.7% year over the past year to be exact — adding even more cost to the total mortgage payment the longer buyers shop. Needless to say, the real estate headlines are rushing people to get an offer accepted and lock in lower interest rates.
But are there really going to be consequences if you wait to buy in 2022? What’s the truth about these real estate headlines? Can you still maximize your return if you wait for the market to cool?
We’re Just in Another Cycle
It’s time for some real talk. All sensationalism aside, as a buyer, you need to remember that rates always change, and the real estate market goes through cycles. It’s just the way it is. If you do choose to buy this year, be prepared to make your best offer. Like 2021, there will be plenty of competition due to low inventory, but the situation is improving from last year as more homes come on the market. You can still lock in some great rates if you buy in the first or second quarter. If you are concerned about getting priced out with the rising rates, then it could be better for you to make a plan to stay put and save more to make a stronger offer. Here are some the pros and cons of waiting to buy a home.
Pros of Waiting:
- If the market continues to cool, there could be more inventory and less competition for a home later in the year. This gives buyers more leverage and options regarding amenities, location, and price.
- If you wait long enough, the market may cycle back to more favorable buying conditions. Think about how different it was for buyers in 2007 compared to 2013!
Cons of Waiting:
- If you need to move ASAP for a new job opportunity, you can find yourself renting instead of owning for a season.
- You should expect to save more for a down payment as the interest rates will make it harder to afford the same house a few months from now.
- Interest rates and home prices will certainly be higher in the next few months of 2022, so expect to get less house for your money if you wait *right now*.
- The further out in time we go, the less certain predictions are, so it’s difficult to know when it will turn into a buyer’s market. You may be forced to stay in your current home for longer than expected.
So, What’s next?
To make the most calculated real estate decisions, you must get the facts. Knowing when things will change allows you to decide whether to act quickly or hold your wallet for the next few months.
So here’s what we know right now. The federal government plans to start raising interest rates in March 2022 in response to inflation. Different economists have speculated by how many basis points the increase will be. Citi economists predict a 50 basis point hike while Wall Street predicts a 25 basis point hike. Meanwhile, there are additional 25 basis point hikes predicted in May, June, September, and December. Needless to say, there’s still some question as to how much exactly rates will climb. As the situation changes daily, buyers can expect to wrestle with unpredictability as they keep a sharp eye on any new trends that can affect them.
Should you let these speculations ruin your home buying plans? We think not. Why? In every type of market, there is a party that can benefit. For example, rising interest rates may make other buyers in your area hesitant to jump into a competitive market. If you act fast and make a strong offer, you can get the house of your dreams right now. In every situation — good or bad— there is opportunity!
If you want to make a move, there will be options for you. Currently, it’s better for the average homebuyer to move quickly to get more house for their money. But there can also be value in waiting if the market doesn’t happen to turn in the direction economists predict. However, the short-term future is pretty solid — if you want to get a home, it’s possible if you act competitively and quickly.
Get Started on Your Home Search
Not sure what to do? Don’t worry at all. At Marketplace Homes, we invite you to explore the market and its possibilities by looking at the facts, and to take comfort in the fact that the market is always undergoing changes. Our team of real estate experts can help you find your next home by presenting you with the best options. Find out more today by scheduling a meeting with our team.