Feb 08 2022

Is 2022 a Good Year to Buy a House?

Let’s delve into some of the reasons why 2022 is an optimal year for homebuyers.

Knowing the right time to buy a home can be difficult, now made even trickier by a pandemic and ever-changing housing market conditions. But the short answer is, Yes, 2022 is a fine time. Let’s delve into some of the reasons why 2022 is an optimal year for homebuyers.

Home Buyers Benefit from Price Normalization

A majority of housing experts predict that the surge in home prices and the unprecedented bidding wars we’ve seen in recent times will see some cooling, with price growth easing back to numbers that have been the historical norms. Fannie Mae and Freddie Mac each offer somewhat similar forecasts, predicting that we’ll see respective 7.9% and 7% growths in US home prices in 2022. That’s admittedly still higher than norms we’ve known historically, but a welcome relief for would-be homebuyers who have seen home prices skyrocket since the advent of the coronavirus.

Other experts think things look even rosier for homebuyers; CoreLogic and Redefin have released predictive models showing that they forecast price growth over the next year to be at respective 1.9% and 3%. Most industry insiders expect to see this tamping down of home-price rises as a direct result of the inevitable rise in mortgage rates. Nobody expected the unprecedented low mortgage rates of the recent past to go on forever, and signs that inflation and the Fed will each have their say concerning mortgage rates have been impossible to dismiss.

While there is some consensus among experts about the kind of housing market we’re going to see in 2022, housing market forecasters are by no means in agreement on everything. Contrary to Fannie Mae and Freddie Mac, the Mortgage Bankers Association doesn’t think we’ll see an increase in home prices in 2022 at all; they’re forecasting a decrease of 2.5% in the median price of homes. The reason? They’re not so sunny on mortgage rates, which they say may climb to 4% as 2022 draws to a close. While that prediction may jar the jaws of some, we would do well to look back and remember the lowest available mortgage rates of 2006 (6.10%) and 2000 (7.13%) — and north of 18% in 1981! By comparison, 2022 looks pretty good even through the cloudiest of forecast lenses.

Where are mortgage rates headed?

This is some positive news for potential homebuyers. While we may not be looking at the stunningly low mortgage rates of 2021, the rise in 2022 looks moderate. Fannie Mae predicts that the rate of 3.1% we saw as we approached 2022 will rise to 3.4%. Redfin foresees a slightly higher uptick, forecasting we’ll get mortgage rates at 3.6% in 2022. Naysayers will point out that even a rise of .5% will have an impact on a 30-year mortgage. And they’re right. Borrowing, for example, $500,000 at a rate that’s half a percentage point higher could add about $140 to monthly payments. And that adds up over the 30 years. But this increase is offset by the cooling in the rise of the prices of homes, still leaving homebuyers in a fairly good position.

And it’s important to consider that the housing mortgage market doesn’t exist in a vacuum; rising interest rates, even the moderate ones we expect in 2022, almost always correlate with wage increases. So while monthly payments may see a slight rise, so, in tandem, will the earnings of the average homebuyer.

More Homes Means More Choices

Realtor.com’s chief economist Danielle Hale believes, despite supply chain issues tied to the pandemic, we’re going to see a moderate rise in housing inventory with single-family starts going up by around 5% throughout 2022. The National Association of Home Builders echoes this forecast, citing high single-family builder confidence. While the NAHB doesn’t foresee an eye-popping surge over 2021 numbers, they do expect housing starts to rise in 2022, and predict that this rise will be significant compared to pre-Covid 2019 figures: 25% higher. How many new homes? Susan Wachter of the Wharton School of the University of Pennsylvania thinks we’ll see more than one million single-family starts in 2022.

It’s also a good time to consider buying a condo, as single-family homes aren’t the only area where we’re poised to have an increase in construction. Multifamily units will also see an expansion. According to U.S. Census data, at the start of the Fourth Quarter of 2021, permits for the construction of 1.5 million housing units had been approved for the year. Barring any unforeseen setbacks, many of these units will be constructed in 2022.

However, a rise in construction starts isn’t the only reason we’re expected to see an uptick in homes on the market in 2022; foreclosures are on track to rise. No experts are forecasting that we’ll have widespread foreclosures of the unprecedented kind we saw in 2008, but conventional wisdom says a jump in auctions and foreclosure sales are on the immediate horizon. We can look to the pandemic as the reason, hitting homeowners who were already having difficulty making mortgage payments with even more financial stress.

Power Shifts from Sellers to Buyers

Many aspects of our lives took roller coaster rides in 2021, and the real estate market was no exception. Home values jumped at whopping rates, almost 20%. Most experts agree that these leaps will likely settle in 2022 and that we’ll be looking at more reasonable increases of around half the 2021 rates going forward. Realtor.com predicts that in 2022 we’ll see a 12% appreciation in home value, with a rise of 2.9% in median home prices.

This slow in growth rates shifts the power balance somewhat from home sellers to buyers, offering more bargaining power to the latter. So we’ll almost surely see fewer bidding wars and a tempering of the fever pitch we had with competition for homes in 2021. All-cash was king over the past year; sellers had their choice of multiple hungry buyers and leaned toward all-cash deals. But as that fierce competition inevitably wanes, buyers with conventional mortgage loans will find themselves better positioned to get their dream homes.

Ultimately, you’ll have to decide for yourself if 2022 will be the year to make your move. And when you do, the folks at City Lending will be right there by your side to help you begin a new phase of your life in a new home.

Planning for a 2022 home purchase? Call today to discuss the process so you are set up for success!

These days, more and more people are looking to buy their dream homes, especially as remote work and work-from-home setups have become an enduring trend. A 15 point increase in requests for home tours and other home-buying services, along with a 11% rise in Google searches for homes, indicate an uptick in demand to buy houses in the country. However, there is a definite worry about affordability when it comes to housing, especially as hefty price tags on available residences have kept the market just as competitive as before, if not more.

According to the latest reports from analysts, it’s not all bad for existing homebuyers and aspiring house hunters. As previous data shows, timing matters in the housing market, and working on different approaches to home buying – like through a reliable lender – can help advance you towards more affordable housing goals. Below, we discuss whether house hunters should buy now or wait, and why.


What is your financial situation?

Counter to the rise in home demand, there is a considerable lack of supply. Along with rising prices and interest rates, the housing market may seem like a highly competitive space with wealthy homeowners fighting for what little property is left. It can be overwhelming, but knowing where you stand financially can help you better strategize your home buying journey. Following the four key components of affordability, ask yourself:

  • How much do you have saved for a down payment?

  • How much does your household earn?

  • What debts do you carry?

  • What is your credit score?


Familiarizing yourself with these components will help inform your decision on whether or not to wait. For example, taking the time to improve your credit scores before committing can save you from higher interest rates in terms of your monthly mortgage payments. Alternatively, many young homebuyers are compromising by living with family for a significant amount time to save up for a down payment. Getting this out of the way when you’re able to can help you get better loans to buy sooner than later in case interest rates end up increasing.

What kind of home is best for you?

Buying a home is a huge purchase and a big commitment. With shifts to digital and remote ways of working taking place in recent years, this has provided homebuyers with opportunities to be more flexible when buying homes. Homes in areas away from busy cities and urban hubs, for example, are considerably cheaper. This makes them a perfect option for buyers who work from home, or aren’t required to be present in the office on a consistent basis.

The lifestyle you expect to live is as much a factor to consider as money. Condos and townhouses offer lower maintenance costs in the long run, and are perfect for smaller households when compared to single-family homes. If the household grows, homebuyers looking for a side income can even invest in renting out purchased properties to passively earn back what they spent and look into bigger properties for family use.

What does the future look like?

In a previous post, we talked about the rising mortgage and interest rates. While the market may seem bleak or intimidating in its current condition, housing experts also believe factors such as supply have a high chance of returning to pre-pandemic levels by the end of 2024. If you are financially able, buying now while others may be intimidated by the prices can give you an edge. Conversely, taking some time to get your finances in order can benefit you when it comes to securing better loans and lower interest rates.

Working with experts can help you make better decisions for the loans you need, making sure you don’t get trapped with high interest rates or hidden charges. The future of fintech suggests that big data is the future of loans, as more online lenders are now using algorithms, which predict potential defaults better than FICO scores do. Data is also leveraged precisely to identify customers who fit various products well — which can give you peace of mind, as an aspiring borrower. Here at City Lending for example, we find the right programs to fit your needs and profile, making sure you get some of the lowest down payments and interest rates along with a premium service.

And if you’re still unsure, it’s worth considering that waiting it out in the market’s current wild conditions could result in even higher interest rates in the future. At the end of the day, buying a house is ultimately a huge investment, which comes with benefits such as privacy and a financial investment that for the most part will weather most economic storms.

Find out if this is the right time for you to get a house by contacting one of our loan officers today.


Content intended only for the use of citylendinginc.com

Written by Alicia Christopher

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