Credello: What You Need to Know If You Are Planning on Buying a House in 2022
NEW YORK, February 23, 2022 (Newswire.com) - Buying a house in America has become decidedly more difficult in the past year. Prices are up 20% across the board, inventory is low, and interest rates are now starting to rise. Last year, 52% of consumers believed it was a good idea to buy a house. Many got shut out due to low availability and overbidding. This year, only 26% of consumers want to take the plunge.
Even the "flippers" struggled in 2021. The practice of getting a mortgage with equity loan to fix up distressed properties only works when no one else wants those properties. Desperation from buyers unable to find premium or even average homes last year drove inventory on "fix-it-uppers" down also. Will that change in 2022? Let's examine that point by point.
Housing Inventory Cycles Should Normalize
Inventory moved so quickly in 2021 that normal sales cycles never developed. The number of homes for sale usually increases in spring. That may have happened last year, but they sold so fast that it made no difference for prospective buyers. Expect that to loosen up a bit this year. The market cycles realtors have become accustomed to are expected to return.
Higher Interest Rates Should Reduce Overbidding
The Federal Reserve Bank has already announced that they'll do several rate hikes in 2022. Mortgage lenders have responded to that. The average 30-year fixed mortgage rate has gone up to 3.56%. It was at 2.77% this time last year. That should somewhat curb overbidding by buyers eager to lock in those low rates. It's dependent upon inventory, of course.
Home Prices Will Continue to Go Up
Home prices rose a record 16.9% in 2021, with the median home price in the U.S. going up to $346,900. Like higher interest rates, that should curb the enthusiasm of buyers who weren't afraid to overpay last year. Zillow is projecting a lower home price increase this year, but we're still looking at another 6.6% by year end. Buying early in the year is recommended.
More Home Buyers Will Appear
Despite early estimates that just 26% of consumers want to buy a house in 2022, expect the number of buyers to increase as the year goes by and more inventory becomes available. Many prospective buyers exhausted themselves out of the market last year. Those folks still want a new home. They just need market circumstances to change.
Expect Home Sales to Happen Quickly
This will not change. Home sales happened quickly in 2021, with some deals closing in as few as 17 days. Many sellers listed their homes on Thursday, had an open house on the weekend, and asked for final bids by end of day on Tuesday. They'll still do that if they can get away with it. Have your finances in order and be ready to bid when you go house hunting.
The Bottom Line: Is 2022 a good time to buy a house?
In 1981, mortgage rates hit their highest rate on record at 16.63%, according to Freddie Mac. In 2009, after the housing crash, they dropped to 5.04%. Even with the recent increase to 3.56%, home buyers are making out okay. That's a compelling reason to buy a house in 2022. If inventory improves and you're able to find the right home, pull the trigger.
Be careful about overpaying. The housing crash happened in 2008 because properties were overvalued, and the bottom fell out of the market. That's not likely to happen again, but the last thing you want is to be upside down on your property just a few years after you buy it. Patience is critical for success. Be smart, bid right, and wait if you must.
Source: Credello
