For homebuyers, 2021 was one of the most challenging years to navigate the housing market in recent history. For-sale homes had multiple offers before they officially hit the market. Contingency waivers were the norm, not the exception. Home prices hit record highs, with some homeowners gaining over 100K in home equity.
With the craziness of 2021 behind us, what’s in store for the housing market in 2022? Is it a good year to take the plunge and buy a home? While the market will be kinder and gentler in 2022, purchasing a home will take some strategy and a lot of patience.
What to Expect in 2022
More Buyers Than Available Homes
About six months of unsold inventory are available in a healthy real estate market. According to the National Association of Realtors data, unsold inventory is at a 1.8 month supply. In 2022, buyers will continue to outnumber sellers. If you’re a potential homebuyer, expect competition and multiple offers to purchase a home. There is good news, though – the supply of for-sale homes is predicted to increase in 2022. The Mortgage Bankers Association (MBA) projects 1.165 million available single-family homes in 2022, rising to 1.210 million in 2023. With more homes on the market, potential buyers will have more options, and those intense bidding wars will start to decrease.
Rising Home Prices
Due to annual inflation, expect home prices to increase year after year. However, the double-digit rise in home values in 2021 is predicted to decline in 2022, but prices will remain relatively high. According to the National Association of Realtors (NAR), home prices nationwide saw an average 14.7% increase in 2021, with 2022 predictions ranging from a 2.8% – 6.6% price acceleration. The slower growth is attributed to a projected influx of new inventory, which will help stabilize home prices.
Increasing Mortgage Rates
At the start of 2021, mortgage rates were at historic lows, with an average rate of 2.66% for a 30-year fixed rate. By year’s end, the rate was hovering around 3%. Industry experts forecast the rates will continue to increase in 2022, primarily due to continued economic growth. According to the latest Freddie Mac estimate, the 30-year fixed mortgage rate will increase to an average of 3.8% by the fourth quarter of 2022. However, even if rates rise as projected, they will remain reasonably low by industry standards.
Tips for Buying a Home in 2022
Get Pre-Approved
Once your finances are in order, get pre-approved for a mortgage before starting your home search. A pre-approval is the offer from your lender stating the actual mortgage amount you qualify for. Often, real estate agents require that you get a pre-approval letter before showing you homes. Sellers will also take you more seriously once you have a pre-approval in hand.
Find a Trusted Real Estate Agent
A local real estate agent with expertise in your desired neighborhood is critical, especially in today’s market. Look for an agent that is not only well-versed in your search area but also has your best interests in mind and can help you navigate the housing market. To find a trusted agent, start by asking friends and family for recommendations.
Set Realistic Expectations
The best way to avoid getting discouraged during your home search is to manage your expectations and expect the unexpected. In today’s market, you need to extend your search period, consider homes needing minor renovations or cosmetic updates, and be prepared for a potential bidding war before finally purchasing your home.
Know What You Can Afford
Before starting your search, determine the maximum amount you’re willing to spend on a home. Additionally, decide what home features are must-haves and which ones are negotiable. For example, a home may have decor from the 1970s but be structurally sound, in your preferred neighborhood and price range. While the house may not be perfect now, it has the potential for you to transform it over time.
Be Patient and Vigilant
Just like your real estate agent, you need to be vigilant. Let people know you’re searching for a home, and provide details about the type of property you’re looking for (i.e., single-family, desired neighborhood). Give yourself plenty of time to house hunt, as the process can take months. And most importantly, be patient. Eventually, you’ll find the home you were looking for.
Trust Pacor Mortgage
When you’re looking for an outstanding resource for mortgage financing, look no further than Pacor Mortgage! Our 36 years of experience make us the optimal choice for your mortgage needs. For more information about our services or to schedule an appointment with us, call us at 773-881-7744 or fill out the contact form on our website!