Three things you should consider if you’re thinking about buying a home.
Today I want to share three things you should know if you’re buying a home in 2022. These will help you decide whether you want to get involved in the market now or wait until later when it cools off.
1. Interest rates are still rising. The Federal Reserve continues to fight inflation by increasing its rate. The projections for the Fed’s planned increases have caused rates to increase substantially over the last eight weeks, and they’re likely to increase further. Some predictions put rates as high as 7% in 2023.
“The supply of homes is low, and the demand is high.”
2. Inventory issues are likely to persist. Right now, our inventory is incredibly low, but that is actually a systemic issue. Builders constructed fewer homes after the crash in 2008, so those houses are simply missing from the market. Builders are now building more houses, but increased costs are raising the price point of their new homes. You can expect new construction to cost between $350,000 to $400,000. It’s hard to find new homes in the $200,000 range.
3. Home prices are likely to continue appreciating. This comes back to supply and demand. The supply of homes is low, and the demand is high. Our low interest rates used to be driving buyer demand, but now generation changes are creating tons of demand. Millennials, who couldn’t buy homes for years, are entering the market and buying property quickly. We also have institutional investors that are buying homes with offers that not a lot of people can compete with.
Because of these issues, home prices are likely to continue to appreciate. The National Association of Realtors projects a 5% appreciation by the end of the year, and that should continue. It’s not the crazy rate it has been for the last few years, but home prices will continue to grow.
If you have any questions about these three things or real estate in general, feel free to call or email us. We’d love to help you.
