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The housing market was a scary place in 2021. Exceedingly low supply, increased demand and historically-low interest rates created a situation that left many potential homebuyers overwhelmed and out of luck. If you didn’t get a chance at your dream home last year, keep reading to see why 2022 is a great time to buy.
Mortgage Rates Are Very Competitive
Yes, the Federal Reserve is poised to raise rates multiple times in 2022, but those are coming at a time when interest rates are at unprecedented low levels. Why does this matter? The lower your interest rates are, the lower your monthly payment will be. Alternately, you may decide to pay your loan off faster by putting a bit more toward the principal.
Take a day and run your information through a mortgage qualification calculator. Adjust the interest rates up and down to see how it affects your monthly payment or how much house you can afford. Use this information to decide the highest interest rate you will accept.
You can clearly see how interest rates matter. That’s why you’ll do well to remember that, even if there are four rate increases over the course of the year, 2022 mortgage rates will still be very competitive. Just ask anyone who purchased a home at 17% interest in the early 1980s.
Rents Are Increasing in Most Places
Low mortgage payments look even more attractive when contrasted against rising rent. After more than a year of difficult rental situations, many landlords are taking advantage of now-vacant properties to adjust rents to current market rates. This has priced many people out of the rental market.
Thanks to several low-income and down payment assistance programs, struggling renters may find owning a home in 2022 the more affordable option. Talk to your local housing authority and nonprofit groups to see what is available in your area.
House Prices Are Forecast to Increase (Again)
You can look at rising home prices in two ways. On the one hand, it means you can quickly get priced out of your chosen market. On the other, rising prices mean that if you are able to purchase a home, you can take advantage of the equity in it down the road. That requires looking at homeownership through a non-emotional lens.
For many people owning a home is the fulfillment of the American Dream. For many people, however, it is also a major investment. Buying real estate is an excellent method of acquiring and building generational wealth. That is because, despite market fluctuations and the occasional historic crash, housing prices continue to increase.
Housing Stock Supply Should Rebound in 2022
Housing inventories were at historic lows in 2021. That meant fierce competition for the homes that were available. The result was bidding wars and many individuals getting priced out of the housing market. Luckily, there appears to be good news on the horizon.
New housing starts — new residential construction projects beginning in a given month — are increasing once again. That means there should be a larger supply of new single-family homes in the spring and summer of 2022. Those aren’t the only numbers trending toward the buyers‘ favor.
Building permit requests are also increasing across the United States. This indicates that contractors are planning to build additional units but have not begun construction. Those units could potentially be done in time to meet the peak house-buying months over the summer.
Neither of these numbers considers existing houses or multi-family units, an increase of which could further reduce strain on the available supply. That just underscores the reality that there are plenty of new homes that will be coming to the market during 2022. You may still see bidding wars, but they won’t be as cut-throat as the ones of 2021.
If you are thinking of buying a home in the next few years, 2022 could be a good opportunity. Increased supply means you should have a chance to consider a few choices before making an offer. Additionally, competitive interest rates can help you make a solid investment with payments more affordable than rent.