Should I Buy a House in 2022?

As we start a new year, one of your resolutions might be to buy a house in 2022. But with an intimidating housing market, you might not be sure if now is the right time, or if you’re prepared to buy a house. We’ve looked at the trends from the end of 2021 to make predictions for the housing market in 2022 to give you a better idea on if 2022 is the year for you to buy a home.

Affordability

Finding a home that fits your needs and is also affordable is going to be a challenge in 2022. The supply of homes continues to dwindle, while the pool of people hoping to buy only grows. Redfin chief economist Daryl Fairweather said “…by the end of [2021], there will likely be 100,000 fewer homes for sale than there were in February when housing supply last hit rock bottom.”

The National Association of Realtors estimates housing prices will climb 5.7% in 2022, while Realtor.com predicts a 2.9% rise. With a record-shattering average home price of $404,700 at the end of the third quarter last year, the amount of people looking in the $400,000 and under market is going to rise as well. Adding to that price range are first time home buyers, who are overwhelmingly Millennials and Gen Z. Millennials are making up a majority of the generations in the home search, with over 45 million Millennials in the prime first time home buying ages of 26-35.

While there will still be heavy competition at almost all price points, there are signs that there might be less bidding wars. This is simply due to the fact that between rising home prices and interest rates, some home seekers will be priced out altogether.

Interest Rates

In December, 2021, inflation was at its highest rate since 1982 at 6.8% per the Bureau of Labor Statistics. The Federal Reserve, in an effort to combat rising inflation, will most likely start to raise interest rates in 2022. While The Fed doesn’t directly set mortgage interest rates, their influence on market rates for borrowing money are looked at closely by mortgage companies.

The 2021 30-year fixed rate mortgage rate average was 3.09% (January – October 21, 2021). While mortgage rates may rise by upwards of half a point by the end of 2022, that’s not necessarily cause for alarm. A theoretical interest rate of 3.6% would still be lower than any average in the last 50 years:

  • 1970’s: 8.86%
  • 1980’s: 12.7%
  • 1990’s: 8.12%
  • 2000’s: 6.29%
  • 2010’s: 4.09%

But, getting locked in to an interest rate early while they’re low can save you money. With a 30 year mortgage, you could end up paying thousands of dollars more for even half a percentage point.

Housing Markets

As the Delta and Omicron Covid variants continue to surge, more and more employers are pushing back their return-to-office dates, some indefinitely. While the trend since the beginning of the pandemic was to leave the cramped coastal areas for more affordable markets where your dollar can go further, that has driven up prices in more attractive cities. Boise, Idaho, for example, has seen the median home price increase to 10 times the median income for the city.

This makes choosing a location just outside some of the hottest projected markets of 2022 instead of within the city limits more affordable, relatively. While you may have a longer commute, shifting your search to a different zip code within a city can even see a steep decline in home price.

For example, the National Association of Realtors cited the 10 most affordable metro areas where families can typically afford to purchase a home. In these markets, families making $50,000 a year are able to afford a 10% down payment and mortgage payments:

  • Decatur, Illinois
  • Peoria, Illinois
  • Springfield, Illinois
  • Davenport, Iowa-Moline-Rock Island, Illinois
  • Waterloo-Cedar Falls, Iowa
  • Youngstown, Ohio-Warren Boardman, Pennsylvania
  • Cumberland, Maryland
  • Erie, Pennsylvania
  • Elmira, New York
  • Wichita Falls, Texas

Homes for Heroes Can Help You Buy a House in 2022

While we know our heroes don’t always have the luxury of picking up and moving wherever they choose, most of these trends apply to a majority of the country. If you are unable to move to a more affordable or desirable location, you still can buy a home in 2022.

When you use a Homes for Heroes real estate agent to buy a home, you’ll not only get a dedicated, local, knowledgeable agent to help you through the process, but you’ll also receive Hero Rewards. This check after your closing is cash back into your pocket that you can use to cover housing-related things like moving costs, new furniture, house upgrades. Or, you can choose to take your Hero Rewards and take a vacation, pay off debts, or anything else you’d like. The rewards are just our way of giving back to heroes to say thank you.

When you use a Homes for Heroes loan specialist, you can also save on closing costs and lending fees. When you use both a Homes for Heroes real estate specialist and loan specialist, you can save on average $2,400! If you want to buy a house in 2022, or want to see if you can financially, sign up now and we’ll connect you with a Homes for Heroes specialist near you.

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