Should You Buy a House in 2022

With the year ending and the next year coming, a common question in the minds of people is how will the housing market be once 2022 comes. Maybe you have been considering buying a house and you aren’t sure if you should jump in now, or wait for the next year.

Making the decision can be complicated. There are many forces involved in the housing market, and for those unfamiliar with it making the necessary research can be difficult.

With all that in mind, we analyzed some of the possible trends for the 2022 housing market and came up with this list of five possible advantages to buying a house in 2022, and one disadvantage we can see for the housing market in the next year. Let’s dive in.

5 Advantages of Waiting Until 2022 to Buy a House

We took into account the current trends in the housing market, the general outlook of it, and the predictions that experts are making for 2022 when we gathered this list of advantages and disadvantages. Here are the 5 advantages of waiting until 2022 to buy a house:

1. You Will Have More Options

One of the biggest and most surprising trends of 2021 was the shortage of houses to buy. The inventory of houses, so to speak, has been lower than in previous years. People have struggled to find a house they like, much less one within their budget. This situation is different for each city and state, but in general, everywhere you looked in 2021 you would have a hard time finding houses available for purchasing.

But it is looking like this will change in 2022, according to an early report.

For example, Zillow showed in early June 20211 that the inventory of houses for sales went up nearly 4% from April to May of this year. This was the first increase in inventory since May of 2020. Zillow also stated that the number of houses for sale rose across 43 of the 50 most populated Metro areas.

Another factor that will influence this increase in houses for sales is that early reports and surveys show that homeowners have an increased interest in selling in 2022. The reason for this is the vaccine rollouts giving more confidence in the rise of moves and the strengthening of the housing market.

If these projections continue into 2022, that means that you will have a bigger variety of houses to choose from. Having more choices is always excellent, especially when looking for a new property. Limited choices lead to worse purchases.

2. You Won’t Have as Much Competition

While most people expected the pandemic to lower the interest in buying houses, quite the opposite happened. The housing market saw a boost during the 2020 pandemic year. More people were buying and selling houses than anyone foresaw.

This increase in competition, coupled with the limited inventory, meant that getting a house in 2020 was more difficult than expected.

However, we have started to see signs that this will start to slow down in 2022.

A report from the National Association of Realtors showed that sales of homes in the U.S. declined in the month of May. This was the fourth month in a row that saw decreases in house purchases. The analyst of the association determined this might be due to frustrated potential buyers and the limited inventory.

Fatigue started to set in for potential buyers. Now looking into 2022, it seems not as many people will be looking to buy as before. This could give you a great advantage when house shopping.

3. You Might Find Better Prices

The limited inventory combined with the increase in interest in buying houses during the pandemic lead to houses being sold for much more than they were worth. In fact, according to a report from the Home Buying Institute 49% of houses sold in the month of April in 2021 sold for more than their listing price.

The increased competition, higher demand, and limited supply have led to this increase in prices for the homes.

Now, with the possibility that the inventory of houses increases in 2022, the fatigue of buyers, and early reports that investors might back away from the housing market due to it cooling down, you might have a far easier time buying a house at a reasonable price. At least at the same amount it is listed for, or perhaps even less.

4. Mortgage Rates Might Not Increase Too Much

One of the biggest factors to consider when buying a house is how much you will have to take in terms of mortgage rates. A big mortgage with high-interest rates will limit your purchase power as well as increase your long-term costs.

This means that if there is an expectation that the mortgage rates will go up for 2022, it wouldn’t be a good time to buy a house.

However, analysts are reporting that it won’t be the case. Most industry analysts don’t expect rates to rise significantly for the foreseeable future, and some even think it could stay around 4% for 2022.

One example of this was the forecast released by the research team from Freddie Mac. As of their most recent projection, they expect the mortgage rate of 4% to stay well into 2022.

Another similar forecast was made by the Mortgage Bankers Association. In their June 2021 forecast, MBA’s analysts stated that they believed 30-year mortgage rates would hover below 4% through the first 6 months of 2022. They predicted a rise to 4.2% for the end of the same year.

If these predictions prove true, potential homebuyers will have mortgage rates that are very similar to what we see now, without any significant increases expected.

5. Rent Prices Are Going Up

If home prices are going up, that means so are rent prices. And if you are buying a home that you won’t be living in, you will need that extra cash to cover the mortgage rates.

Realtor.com released a report that showed rental prices in 44 out of 50 of the country’s largest metro areas have increased beyond what they were before the pandemic. The median rent was at a historical high of $1,575 (as of June) at the nationwide level- which was up 8% from last year.

This is mostly driven by the low inventory we have seen, which squeezes the market and drives the prices up all around.

If you are renting right now, don’t expect your lease to go down or even to find a better one. This means it’s a great time to purchase a house of your own instead.

Unlike leases and rent, mortgages stay the same until they are done, with the opportunity of refinancing. Leases and rent, however, can increase depending on the terms of your contract. This means buying a house next year might be much better than continuing to rent or lease a property.

1 Disadvantage of Waiting to 2022

As we have shown you, there are some great advantages of holding off on purchasing a home until 2022. However, there may be some significant drawbacks as well. If house prices continue to rise as they have in recent months, buyers who wait until next year to purchase a home may end up paying more.

Over the last 12 to 18 months, home values have climbed steadily and dramatically. With a few exceptions, this is true for most cities across the country. The majority of forecasters expect this tendency to continue in the future.

"The United States home values have gone up 13.2 percent over the past year, and Zillow predicts they will rise 14.9 percent in the next year," according to Zillow, a real estate data company.

The biggest disadvantage of waiting until 2022 to buy a property could be this. We're getting into the weeds of speculation and predictions, to be sure. Nobody knows what will happen to the real estate market between now and 2022. However, present patterns suggest that property values in the United States will continue to rise gradually into the next year.

To Buy or Not to Buy

Ultimately, the decision of whether to buy or not to buy will fall to you. As previously mentioned, these are just predictions and estimates from industry analysts. Nobody can completely predict how the housing market will be next year.

However, if you are looking to buy a home it might still be a good time to do so. If these potential advantages are not enough to dissuade you, then you might be better of waiting for another time instead.

Conclusion

We hope you have found this breakdown of housing market trends for 2022 useful in your decision of whether to buy a house or not. If you still haven’t made your decision and feel like you prefer waiting for a little into 2022, then keep an eye on our blog as we continue to share details about the housing market as 2022 evolves.