Should I Buy a Home in 2022?
With the rise of inflation and mortgage rates, prospective homebuyers are wondering if they should buy a home in 2022. While the landscape of the 2022 housing market will be different compared to the previous two years, 2022 could still very well be one of the best years to buy a home, and here is why:
Why You Should Buy a Home in 2022
Higher Inventory and Fewer Bidding Wars
The low inventory in the housing market drove housing prices higher and higher in 2021, making it a fast-paced and competitive market. While interest rates were low, housing prices were inordinately high due to bidding wars.
The housing market in 2022 is still considered a seller’s market. However, with the rise of mortgage rates and market prices, the housing market is predicted to slow down. This means a larger inventory for homebuyers. According to Business Insider, bidding wars of 2021 have slowed down and 2022 is already shaping up to be a much more normal-paced housing market.
While the price of homes will continue to appreciate along with inflation, a slower-paced housing market will hopefully help slow the rise of home prices.
Renting Vs. Owning a Home
Surprising as it may be, it is more expensive to rent in terms of monthly expense as opposed to owning a home and this reality became increasingly apparent in 2021. The National Association of Realtors® predicts rent prices will rise faster than home prices at a rate of 7.1% in 2022. Rent prices have risen dramatically alongside the rest of the housing market and in 10 years, the average price of renting will have only increased. A mortgage payment, on the other hand, will remain relatively the same in 10 years’ time. For many prospective borrowers, the largest barrier to buying a home in 2022 is not the expense of the monthly mortgage, but the cost of the upfront down payment and closing costs. If renters can find a way to get past these initial costs and purchase a home, this could result in saving tens of thousands of dollars over the next decade.
Historic High in Equity for Homeowners
For current homeowners who are considering upgrading and moving into a new home, 2022 is your year! As the price of homes continues to appreciate, homeowners’ equity in their current homes has increased to a historic high. This gives you more purchasing power as you shop for your next upgrade.
Challenges for First-Time Homebuyers in 2022
Currently, the largest barrier to purchasing a home for first-time homebuyers remains the upfront down-payment and closing costs. There are ways you, as a first-time homebuyer, can save for the down payment and closing costs for a home purchase. You can save money from your 2021 tax return. You can see if one of your parents or relatives can gift you the money needed to cover a down payment. You can take out a loan. You can also see if your local state has any first-time homebuyer down payment assistance programs.
There are also loan options that do not require a down payment. VA loans and USDA loans do not require any down payment. With an FHA loan, you may qualify for a down payment assistance grant. If you meet all the qualifications necessary to purchase a home but cannot produce the funds for a down payment, know that this does not rule you out of the housing market and that there are still options for you as a first-time homebuyer.
As prices of homes and mortgage rates continue to increase with the rise of inflation in 2022, purchasing a home will come with new challenges for first-time homebuyers. However, there are still financially advantageous reasons for first-time homebuyers to purchase their first home in 2022. While purchasing a home might prove challenging this year for first-time homebuyers, the financial benefits of owning a home in 2022 far outweigh the challenges.
Contact a Loan Specialist
The best way to understand all of your options as a homebuyer is to contact a loan specialist. Our loan specialists at VeteransLoans.com can help determine if you qualify for a loan and explore all of your options with you. Call (888) 232-1428 today to speak with a loan specialist!