Low mortgage rates made owning a home more accessible and appealing in 2021, which increased buyer demand. Is it smart to buy a house in 2022 if you missed the boat in 2021?
For many people, the answer is “yes.” Even though it may come as a surprise, the key is to follow facts rather than feelings.
Here are some reasons why it might be a good idea and why it wouldn’t be.
Related Reading: How To Buy A House At 18 in 2022？
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Pros Of Buying A Home In 2022
1. Mortgage Rates Expected To Drop
In the three weeks before the start of the fall, conventional 30-year fixed-rate mortgage rates increased by 0.76 percentage points. It highlights August’s challenges for buyers by ranking as the 15th-fastest mortgage rate increase in the previous 50 years.
But rates also frequently fall sharply after a sharp increase.
After notable spikes, thirty-year mortgage rates decline on average by 0.42 percentage points over the following three months. Interest rates may return to the fours for fall home buyers.
Another interesting statistic is that, since 2007, the fourth quarter has seen a decline in 30-year mortgage rates 86 percent of the time.
2. Less Competition For Homes For Sale
Fall 2022 is a good time to purchase a home because there is less competition for available properties.
More sellers than at any other time in the previous year have homes listed for sale, according to the National Association of REALTORS®. Additionally, compared to Spring, those homes for sale are receiving half as many offers, which the sellers are aware of.
Buyers during the fall season should take advantage of the change.
Contrary to earlier this year, buyers today have the ability to offer less than the asking price and to include necessary contingencies like mortgage, appraisal, and home inspection. Sellers are more willing to negotiate when there are fewer offers per listing.
Before beginning your home search, obtain pre-approval.
3. Sellers Are Willing To Cut Prices
When sellers are willing to lower their asking prices, it’s a good time to buy a house.
According to Altos Research, nearly half of all home sellers have reduced their asking price this season, which is a third more than usual.
Although home prices are rising across many American cities, sellers are realizing that an overpriced home won’t sell in today’s market. Homes that are reasonably priced sell quickly. Homes that are overpriced sit vacant.
Although it isn’t yet a buyer’s market, sellers are uneasy.
Get pre-approved to buy a home right away.
4. New Credit Score System Adds 22 Points
Another reason why the Fall is a good time to purchase a home is that U.S. credit bureaus no longer add medical debt and collections to credit scores.
The changes to medical debt and credit scores are advantageous to 23 million consumers.
The new credit score rules, as of last season:
- Satisfied medical collections don’t count against credit scores
- Unpaid medical collections are initially ignored
- Small medical collections are eliminated from scoring beginning in 2023
According to estimates from the government, the typical home buyer’s credit score is 22 points higher. Lower mortgage rates, smaller down payments, and greater home affordability are all made available to those with higher credit scores.
Cons Of Buying A Home In 2022
High buyer demand has driven property prices up. Fewer sellers mean higher housing costs for potential buyers.
Thus, you should expect to pay more if you decide to buy a house in 2022. And unlike last year, it’s possible that you won’t be able to get a low mortgage rate to make up for the higher cost.
According to the National Association of Realtors, the median price of an existing home sold in August was $389,500, an increase of 7.7% from a year earlier. Additionally, many buyers overbid the asking price in a seller’s market in order to have their offer accepted.
There is also the matter of the extremely low housing supply to think about. As of August, there were 1.28 million available housing units. That represents an increase of 1.5% from the previous month, but the supply of homes is still only 3.2 months. For there to be enough inventory to satisfy buyer demand, there typically needs to be at least a 4-month supply of homes.
No spring or summer housing boom occurred the previous year. Additionally, there was no fall boom. Later in 2022, the availability of housing could gradually increase. The housing inventory did increase over the summer, but it still needs to rise in order to reduce the market’s heat. This year, there was no spring boom.
How To Buy A House In 2022 With No Down Payment?
The purchase of a home does not require a 20% down payment.
For first-time buyers, there are seven mortgage options with low down payments, including two with no money down. You can fulfill your American Dream with the aid of tax credits, grant programs, and other first-time buyer assistance.
Homebuyer.com also provides first-time buyers with credit scores of at least 580 with down payment assistance. In order to enable buyers to purchase a home with no money down, the mortgage includes a 5% forgivable down payment loan.
The typical first-time home buyer needs more than ten years to save the required 20% down payment. Stop postponing homeownership. To benefit from the advantageous conditions currently in place, use a low- or no-down payment loan.
Is Renting Currently Better Than Buying?
Depends, particularly when we’re dealing with an erratic period of high inflation.
On the one hand, if you purchase a home and obtain a fixed-rate mortgage, your fixed payment will remain the same each month regardless of how much home prices or interest rates rise. Renting has the disadvantage of a high probability of rent increases due to inflationary pressures. Rents are currently rising more quickly than wages, and if homebuyers are priced out of the market, there will be more pressure on renters, which will increase competition. Many people are already dealing with a hot rental market that has resulted in rental bidding wars and evictions.
On the other hand, even though a fixed-rate mortgage can offer you more predictability and budget stability, “as long as inflation continues to outpace wages, there could be benefits to renting right now as the economy worsens,” said Torabi.
For instance, one benefit of renting over buying is that you can save the money you would have otherwise needed for a down payment. If you don’t have to worry about saving up a down payment and depleting the majority of your bank account to secure yourself a home during a period of economic uncertainty, you can maintain more liquidity. If a recession has a negative effect on your financial situation, having more cash on hand can give you more security.
“It’s important to know the differences in cost of owning a home versus the cost of renting,” said Robert Heck is the online mortgage marketplace Morty’s vice president of mortgages. “How much will homeowners insurance be? How much are the yearly property taxes? If you’ve been renting, you might not be accustomed to paying property taxes. Take into account the costs associated with home maintenance.”
Ultimately, whether you rent or buy often comes down to practical factors, such as whether you need more space to start a family or your lease is about to expire- regardless of market conditions.
