Will 2022 be the year you buy a house?
If you’ve been considering it, you’ve likely been watching the real estate market. You’ve probably seen that interest rates are increasing and home prices rose at record levels in 2021.
Does that mean it’s a bad time to buy a home? The experts say no. Jon Meyer, The Mortgage Reports’ loan expert and licensed MLO said, “While it’s always nice to get a better rate and have a smaller total monthly payment, if you can afford the home, it’s never a bad time to buy.”
However, with home prices and interest rates still rising, it’s a good idea to buy sooner rather than later. Don’t let those two facts discourage you; our rates are still historically low, so even a more expensive house will cost less now than it did in the past.
It’s not a great idea to wait and see if rates decline again. Playing the waiting game with interest rates rarely goes in your favor. On December 15, The Federal Reserve announced that they’ll increase rates a few times in 2022. However, even if you decide to wait to buy until later this year, rates will still be extremely affordable.
Across the nation, the median home price climbed 14.6% year over year in December. The excellent news is that home price growth will slow in 2022. However, don’t take that to mean that prices will slip; the rate of growth will just decelerate.
If you’re thinking that you might just rent for a while and see how things go, that’s not the best idea. While you won’t have to pay property taxes or homeowners insurance, rental rates are inflating. In November, the average monthly rental rate jumped up 6.8%!
Inflation has reached its highest point since 1982, and many people turned to renting last year. However, that heightened demand and inflation rates will likely make renting even more financially challenging than buying in 2022.
What about the ongoing pandemic; will that affect your home-buying prospects? COVID-19 has been both positive and negative for homebuyers, which means our market has changed somewhat in response. You need to be more in the know than ever, so here are a few tips:
- Know what you can afford. How much have you saved for a down payment? What is your credit score? Your score will directly affect the interest rate you can get on your loan.
- Get pre-approved for your mortgage. Your lender will take into account your debt payments, income, and credit score to determine exactly how much mortgage you can carry. A pre-approval letter means your lender has reviewed your credit, analyzed your file, and decided to fund your home loan. A pre-qualification isn’t as good as a pre-approval.
- Decide what trade-offs you’re willing to make. Make a list of the things you can live without so that if you have to make choices, you know what to do. Each decision you make for your new house and the prioritization you give it has consequences.
- Consider housing alternatives. If buying a single-family home is too much right now, think about buying a two- or three-family property, where you’ll live in one unit and rent out the other(s). Also, building a multigenerational household to leverage additional income is a rising trend. With the way COVID is going, remote work is increasing in popularity, so perhaps consider buying in a more affordable area, even if it’s farther from your workplace.
- Work with professionals. Everyone you work with during the process should be willing to kindly share their knowledge and expertise. That includes your real estate agent, home inspector, mortgage lender, tax expert, and whoever else you contact for assistance. Remember to educate yourself about the process both beforehand and during the transaction.
Waiting to buy has plenty of risks. A postponement will hurt your wallet and your ability to qualify for the home you want. Check your eligibility and the latest interest rates to see if locking in a mortgage and buying a house this year is right for you.
If you’d like to take a look at what’s available on the market today, you can view our multiple listing service here:
Click here to see all available homes in Western Upstate SC.
At the end of the day, it’s a good idea to talk with a realtor if you’re considering selling. Give me a call at (864) 985-1234 or email me at firstname.lastname@example.org. I can help you run the numbers and work through your specific situation. Of course, if you just want to ask some questions, I’d be more than happy to answer them.
I look forward to hearing from you,