Real Estate Outlook, Outlook for Home Buyers in 2022
During 2020 and 2021, the housing market is booming across the country. But, what can we expect in 2022? Will the housing market provide that much-desired delay to future homebuyers?
It seems like an uphill, never-ending battle for many home buyers across the United States.
“My experience looking for a home has been frustrating,” a Georgia resident told FOX Television Stations Group. “I’ve been texting my agent day and night to press an offer so he just goes home before I can see him.”
But that’s just the tip of the iceberg for first-time homebuyers, and it probably isn’t the first story you’ve heard, especially lately: tight inventory, multiple offers on dilapidated properties, homes selling well above asking price – sometimes by the hundreds of thousands. dollars.
Last year, the nationwide housing market rebounded, with annual existing home sales hitting their highest level since 2006, according to the National Association of Realtors (NAR).
“After an initial lull in 2020, the market has been very hot and it’s getting hotter,” said Ron Melendez, a senior Los Angeles dealer at Compass’ The Stephanie Younger Group.
So, how can first-time home buyers navigate the process without running out, deflated, or giving up completely?
Don’t expect home prices to fall in 2022
If you’re a potential first-time home buyer and are hoping (or praying) that home prices will fall in 2022, most experts agree: Don’t count on it.
“If people are waiting for the price to go down, it won’t,” NAR chief economist Lawrence Yun told Fox TV.
Brampton, FE-10 March: Homes continue to draw higher prices, as this latest sold sign shows. Inventory continues to decline which helps drive up prices for those looking to buy. Coronabed Toronto Star / Rick Madonnick (Rick Madonik / Toronto Star
Yoon expects healthy price gains in 2022, but noted that the double-digit price gains and intense multi-offering cases that occurred in 2020 and 2021 are likely to be a thing of the past.
“Momentum will slow down a bit,” Yun added.
Real estate and investment services firm, ESR Group currently expects home price growth of 7.6% in 2022, down from 17.3% last year.
Get ready to compete
But since experts predict that prices aren’t likely to drop anytime soon, they say you need to be prepared for the competition if you’re someone who wants to buy a home this year and in this climate.
“If you want to buy, it’s totally possible, but you’ll be pushed out of your comfort zone, so make a plan with an agent you trust,” Melendez continued.
While experts say higher mortgage rates should help slow home price growth, higher rates will make home ownership less expensive for those who are borrowing.
However, this will not affect anyone who pays cash – another dilemma that homebuyers are currently facing, as they compete with all cash buyers.
Related: Treasury targets all-cash real estate deals as part of anti-corruption efforts
“This is the struggle of a lot of people competing with cash buyers and people with big resources,” said Lloyd Fox, a broker and owner of Fox Long Realty Group in Scottsdale, Arizona. “It’s a struggle for first-time buyers and people with average resources to get a home and not give up a lot of protections like appraisals and home inspections. There is no time for decisions to be made or the decision to be made for you by someone more decisive.”
The future Atlanta resident agrees.
“I’ve been looking for homes in the 500,000 to 700,000 range but there are buyers who are offering all the money or offering to pay 100,000 on the purchase price and that’s something most people can’t afford. So, it’s been a struggle for me and I’m sure many others will. ‘ explained a Georgia resident. “The market is crazy right now, but from what I’ve heard and read it’s going to get even crazier, so it feels like an uphill battle that never ends.”
Don’t be alarmed by high interest rates
Yoon predicts that the US will “certainly” see higher rates on mortgages, but notes that there should be no cause for concern.
“We’ll probably get to a rate closer to 4% on mortgages by the end of the year, from 3% last year. It’s an increase, but it’s not a huge increase,” Yoon explained last month.
Related: Will the real estate housing market collapse or calm down in 2022? Experts give their 2
According to data from Zillow, the current average interest rate for a 30-year fixed-rate mortgage is the most popular at 3.91%. NAR expects the 30-year fixed rate mortgage to close the year at 3.9%.
Fox noted in February of Arizona rates that “3.5% is still a ridiculous rate you’ll probably never see again.”
It is suggested that you ensure that your fixed interest rate is as low as possible. He suggested that you might consider opening a line of credit at lower rates today as a rainy day option to keep it open.
Stock will go up but stay low
In addition to high prices, record low inventory is also sweeping cities in 2022.
“The inventory is terrible. There is nowhere near enough to meet the extremely high demand. We are seeing 10-20 or more buyers per home, which is driving up prices on a weekly basis,” Melendez added.
In the Detroit metropolitan area, it’s no different. Eric Gormo, a Detroit agent and owner of Keller William’s Eric, revealed that inventory in the area is currently at its lowest.
A sign for sale is seen in front of a purchased house in San Francisco. (Image source: Justin Sullivan via Getty Images)
“We have seen a decrease in the inventory which has led to a significant increase in sales prices. Some areas have seen a rise in prices from 15 to 30 percent in the last year,” he said.
Since mortgage rates will continue to rise but are not expected to increase significantly, experts suggest that it may be worth waiting until more supply or options become available later in the year or the next.
However, be aware, waiting longer also means higher prices as home values continue to increase.
“Do everything you can to put yourself in a position to put in the strongest showing now. You may not be able to afford the same area by the end of the year,” Gormo added.
Consider expanding the main search area
Yoon said homebuyers hoping to get their hands on their prices may also want to broaden their geographic search as homes may be more affordable and more construction may occur.
Mass immigration from California and New York and expensive housing markets due to the development of work-from-home flexibility for employees are also affecting the housing market.
According to NAR, states surrounding California — including Arizona, Nevada, Idaho, Oregon, and Washington State — are outperforming California in the housing market, primarily because Californians move there in search of better affordability or are able to do so due to an increase in Work from home options. .
But in turn, this is another factor affecting housing prices elsewhere.
“It was exciting and it all looked like it was for sale with California money,” Fox said of Californians moving into the Phoenix real estate market. “Prices have gone up with ridiculous bids. People win and pay 50-100k for the next person in some cases. Neglect in this sense has led some communities to question values, but January 2022 saw another 2% jump in average single-family home price “.
Melendez said he’s noticing the trend in California, adding that “Arizona, Colorado, Tennessee and Texas are all popular destinations where California transplants can flex their economic muscle, and we’re hearing how difficult this can be for the local buying population.”
But, Yoon said, increased construction in other areas, especially suburbs, could move the US housing market toward a more balanced state.
“We’re seeing more builders,” Yoon added, noting the additional rise in some commercial real estate buildings.
Jurmo also noted a slight increase in construction in Michigan, adding, “We’re seeing a lot of new homes being built and new subdivisions being developed. Most of them are in the far suburbs.”
Conclusion: keep your strength
Only time can finally tell what will happen, but one thing is for sure: home buyer fatigue is settling in.
Melendez added: “This market requires the right mindset and confidence that what looks like an exorbitant price now will look like a bargain in a month. It’s starting to feel like buyers are taking advantage, not ready to play the game anymore.”
Sam Khater, chief economist and head of economics and housing research at Freddie Mac, agrees.
“Given how quickly the market has shifted over the past couple of years, there will likely be a fair amount of homebuyer stress to come later this year, so any news of a slowdown in activity back to normal levels would be welcome by consumers. .”
If you decide to wait and rent instead
Experts say many factors are responsible for astronomical rents, including a nationwide housing shortage, extremely low rent vacancies and continued demand as young people continue to enter the crowded market.
But with the number of homes for sale declining, this has caused many families to remain renters.
If you have trouble renting, there are a few things you can do to get some relief, said Brian Carberry, an expert at leading national consumer resource Rent.com.
Rent relief: Experts trust the current rental market
Can renters see some relief amid the ongoing COVID-19 pandemic? Will apartment prices finally drop? Expert explanation
If you are a good tenant who pays their bills on time and has been in your unit for an extended period of time, you may be in a position to negotiate the rent. The landlord may not want to deal with putting a rent on the market and waiting for another tenant to sign a lease, so you may be able to negotiate your monthly payment.
If you need to find a new rental, there are also a few options you can try.
Carberry recommends offering to extend your lease to 24 months instead of 12 months, as a tempting offer to own the property.
Related: Will tenants see relief, lower rental payments in 2022? Experts weigh
You could also consider looking for amenities that are already included in your rent payment. For example, if there is additional parking space that you don’t need, you may be able to give up that space for a lower rental payment.
“Some people might pay more, some might pay less, but there are deals out there. Just do your homework and look, and when you find something, don’t be afraid to act on it, because it is,” said Carbery.
This story was reported from Los Angeles.
