Home prices are predicted to climb at a slower rate than in 2021, and mortgage rates are expected to rise as well.
In the year 2021, it was difficult to find a home. While prices skyrocketed around the country, shoppers hurried to find residences and engaged in bidding wars.
According to economists, the market will be a little kinder in 2022. However, pursuing the American dream of homeownership will need planning and perseverance.
“Competition in the 2022 housing market will feel like Olympic training,” says Christian Ross, managing broker at Engel & Volkers Atlanta.
What to expect and how to get ready are outlined below.
Homes for sale are outnumbering purchasers.
Ross estimates that unsold inventory in a healthy real estate market is roughly six months. At the present sales rate, that implies it would take six months to sell all of the homes on the market. According to data from the National Association of Realtors, unsold inventory was less than half that in recent months across the country, and even lower in hot cities like Atlanta.
A ray of hope: Real estate industry organizations anticipate an increase in the availability of for-sale homes in 2022.
In a recent news release, Lawrence Yun, the National Association of Realtors’ chief economist, stated, “With more home inventory to join the market, the heated multiple offers will start to ease.”
RE/MAX DFW Associates agent Todd Luong has already noticed this tendency. In the Dallas-Fort Worth market, he says he’s witnessed an increase in pending sales and anticipates inventory to improve slightly.
However, buyers will outweigh sellers for the foreseeable future. “It’ll still be quite competitive,” he predicts.
Prices will climb, but not as swiftly as they have in the past.
Year over year, house prices are expected to rise, but at a slower rate than in 2021.
Home prices are expected to rise only 2.8 percent in 2022, compared to a 14.7 percent increase in 2021, according to the National Association of Realtors.
Other experts’ forecasts differ, but the projected percentage gains remain in the single digits. According to Fannie Mae, the increase will be 7.4%. The Mortgage Bankers Association predicts a 5.1 percent increase, while Freddie Mac estimates a 7% increase.
Expected rise in mortgage rates
In 2021, average mortgage rates stayed near historic lows, with the average 30-year fixed-rate hovering around 3% at the year’s end.
Rates are expected to rise in 2022, according to economists, but this must be viewed in context. Even if they rise as expected, they will remain at a low level.
The 30-year fixed mortgage rate will rise to 3.7 percent in the coming months, according to Yun of the National Association of Realtors. The Mortgage Bankers Association predicts a 4% increase, while Fannie Mae and Freddie Mac predict a 3.3 percent and 3.5 percent increase, respectively, for the 30-year fixed mortgage.
In 2022, here are some helpful hints for purchasing a home.
Here’s how to prepare and compete in the current market.
To begin, look into different lenders and get pre-approved.
Kevin Parker, vice president of field mortgage originations at Navy Federal Credit Union, says, “We always recommend getting in contact with a lender as soon as possible, not just to apply but to understand… the process.”
The type of mortgage and lender determine the lending criteria. For some conventional loans, the required down payment could be as low as 3%. In a seller’s market, however, putting down more than the minimum is advantageous. Larger down payment may give sellers more confidence in your loan’s ability to close, increasing the likelihood of an offer being accepted.
Fees and rates differ as well. Parker advises that when comparing lenders, you should request closing cost estimates.
Apply for a mortgage preapproval once you’ve got your finances in order. A preapproval is a commitment from a lender to lend you a certain amount of money under certain conditions. Before a showing, your houses, real estate agents will ask if you have been pre-approved.
To find the best deal, apply with multiple lenders and compare loan estimates. An application for a loan must include a loan estimate, which is a standard document that lenders must provide. The interest rate, monthly payment, and closing costs are all broken down on the form.
Find a reputable real estate agent in your neighborhood.
Dana Bull, an agent with Sagan Harbor side Sotheby’s International in Boston’s North Shore area, says that an agent’s local knowledge is crucial in this market.
Local agents who have worked in their communities for a long time are aware of what is going on in their neighborhoods and share this information with one another. Bull claims that a member of his family recently purchased a home in a different neighborhood. She claims that she would normally represent him. However, she referred him to an agent in that town because of the hot market.
Establish reasonable goals.
“Managing buyers’ expectations is the most effective method to keep them from becoming discouraged or quitting up,” Ross adds. “Knowing from the start of their search that they need to start early, explore homes that may need some cosmetic repairs, and expect to deal with ten or more offers before closing on their property can be useful.”
Make a list of what you desire and what you can give.
Before you start shopping, know your maximum offer, how the offer will be structured, and the terms you’re willing to negotiate, says Josh Horner of RE/MAX Masters in Salt Lake City. The process will be less untidy if you plan ahead of time.
He compares it to taping a home before painting it.
According to Otto Catrina, a San Francisco Bay Area agent and president of the California Association of Realtors, look for properties that are priced below what you’re qualified to buy, so you have the opportunity to haggle.
Decide what you absolutely require and what you can do without. Catrina believes that a house can have “ancient pink tile and linoleum” and still be a good, structurally solid home.
According to Bull, there will be less competition for fixer-uppers. “‘What does this house have to offer?’ Is it possible for me to make it into what I desire over time?'”
