2 Key Factors to Keep Your Eye On
Successfully buying a home in a sellers’ market can be…challenging.
To say the least.
Right now, getting into the home you want on the terms you need depends on two major factors:
“Going forward, the conditions buyers face are primarily dependent on two things,” said Danielle Hale, the chief economist at Realtor.com. “Mortgage rates and housing supply.”
So, let’s take a deeper look at each of those factors now.
What Are Mortgage Rates Going to Do in 2022?
Nobody knows for sure, but here are the facts: rates are already creeping north, and most experts predict they will continue to rise throughout 2022.
Why do interest rates matter so much? Because they directly affect how much you’re going to be paying each month.
Let’s assume your home loan is $400,00. At an interest rate of 3 percent, your mortgage (not counting taxes and fees) would be $1,686. At an interest rate of just 3.5 percent, that jumps to $1,796. That’s a monthly difference of $110.
Are interest rates lower than they were just a few years ago? Yes! That’s still great news for potential home buyers. Are they on the rise, though? Likely.
So, if you’re already committed to relocating or purchasing a home in 2022, sooner would be better than later if you’re looking to lock in the best possible interest rate.
How Is Housing Inventory Trending?
The number of available homes has a huge impact on the housing market. The more inventory available, the pickier potential buyers can be. (Don’t like that basement? On to the next house!) When buyers have more options, there’s less overall competition. That means fewer bidding wars and less power and leverage for sellers throughout the negotiation phase.
2019: Deal breaker. 2021: I’ll give you $100,000 over asking!
The National Association of Realtors (NAR) recently released its Existing Home Sales report. It showed the current inventory of homes is about 2.4 months. (A six-month supply is considered a “balanced” market.)
While it’s clear we’re still very much in a sellers’ market, there could be hope for those looking to buy in 2022. One recent survey revealed that many who plan to sell will do so this winter.
If inventory does go up throughout 2022, buyers could get a much-awaited break.
Want a more in-depth look at what the market could do in 2022? Check out these real estate predictions for the coming year.
What Does All This Mean for Buyers and Sellers?
Here are some key takeaways to keep in mind:
- We’re still a long way away from a balanced real estate landscape. (More than 2 million homes would have to hit the market to get to that six-month supply benchmark.)
- Competition for available homes might dial back a bit but will likely remain fierce.
- Market conditions don’t shift overnight. Changes will be gradual.
- To get into your dream house in 2022, you’ll still need to act fast. Get pre-approved for a loan. Find the right Realtor. Be ready when the right thing does hit the market.
Ready to connect with a real estate agent and talk through your options? Contact us today, and we’ll show you real estate as it should be!
