2021 was an excellent time for selling a home, but not necessarily a great year for buyers. Prices went up while inventory dropped. The National Association of Realtors (NAR) reported the national median home price hit an all time high in June at $362,800.
With such a topsy-turvy couple of years, could 2022 be a breath of fresh air? Experts are hopeful that the market will begin to normalize this year, which is great news for buyers that may have waited to purchase at the beginning of the COVID-19 pandemic.
Although things are better than they were, 2022 will still be a competitive seller’s market. Buyers should expect bidding wars and houses exiting the market quickly. Interest rates, rent, and average home prices will continue to rise this year. Despite these challenges, there are ways to win in a seller’s market.
With homes continuing to sell quickly, inventory will remain limited. Despite this, experts predict inventory to grow an average of 0.3% this year. Realtor.com data shows that 28% of homeowners chose not to sell in 2021 because they couldn’t find a new home to buy and expect these owners to list in 2022. New construction will bring a positive change into the market as well.
Experts predict that the popularity that suburbs saw in 2021 will continue into 2022. Along with affordability that metro areas simply cannot compete with, more workers are focusing less on finding homes close to work. With remote work continuing to rise, potential homebuyers are widening their search parameters or relocating to different cities.
Realtor.com expects home sales will reach 16-year highs nationwide. This is partly due to the COVID-19 pandemic, which ignited an extreme housing demand in 2020. The market attempting to balance high demand and short supply pushed prices higher. While this will ease this year as inventory adjusts, Realtor.com is still expecting a 2.9% increase in sales prices. This can lead to higher monthly costs and mortgage rates.
The U.S. Census Bureau cites that the United States population grew at the slowest rate the country has seen since its founding in 1776: a simple 0.1%. The National Association of Realtors states that the drop in the birth rate could have contributed to continued stagnation in the market. Typically, the birth of a child is a motivation to buy and a child moving out is motivation to downsize and sell.
Baby Boomers have been preferring aging in place and will continue to stay in their current homes, contributing to the ongoing inventory shortage. On the reverse, 45 million millennials will be in the prime of first-time homebuying age this year, making them the top competitors in the market.
Despite the challenges this upcoming year will have, there are various things you can do to set yourself up for homebuying success.
Knowing how much money is needed to buy a home can help you plan for the process before entering the market. Not only should your savings be ready for a down payment, but you will also need money for escrow, closing costs, home insurance, and more.
Make sure your credit is in good standing as well. Having a higher credit score can help you qualify for a mortgage with the possibility of receiving a lower rate.
Being pre-approved gives you a distinct advantage over other potential buyers. Not only does it prove to sellers that you’re serious about your offer, but it also makes your mortgage process much quicker. You’ll be in your new home in no time!
During this competitive time, familiarize yourself with negotiations and how to navigate a bidding war. Be sure to act quickly, both when scheduling a showing and when making an offer. Working with a licensed Real Estate Agent can also give you an insight on local market trends and assist in your house hunt.
Knowing what loan programs you qualify for can be confusing, but that’s why Homestead Funding is here to help. Contact us today to be put in touch with a Loan Originator who will assist you and answer any questions you have during your loan process.
Sources: Realtor.com, REALTOR Magazine, CNBC
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