In the U.S., we’ve seen a strong rise in home prices over the past few years. The current housing market is still experiencing a shortage of homes for sale, and while it’s not likely to get any better in the near future, prices aren’t going to drop. According to a recent survey by the National Association of Realtors (NAR), “The median existing-home price is projected to reach $385,000 in 2022.” That’s a 13 percent increase over the current year. However that does NOT mean that the market is about to crash or that prices will plummet.
2021 was a record year for sales, what we’re really seeing now is home sales volume returning to normal, pre-pandemic levels. In other words, this is more of a housing market correction than a recession.
A housing recession isn’t really something to be concerned about because home prices aren’t in a recession. For sure by August 2022 we had seven consecutive months of decreases for the total number of home sales. Fannie Mae predicts home sales to drop 16.2% by the end of 2022. Keep in mind, home price growth continues to increase in comparrison to the previous year.
Too many houses for sale with not enough buyer demand would be something to worry about. This could cause home values to drop severely, hurting the overall economy, however, and thankfully, that is not the situation we are in. It’s highly doubtful that home prices will go down in 2022 and 2023. Freddie Mac predicts home prices will grow at a slower rate of 4% in 2023, but they’re not going to drop in the coming years.
The average home price in 2022 is still higher than in past years, so odds are you’ll still make a pretty penny. But if you’re waiting to sell because you think your home will double in value soon, don’t count on it. You’ll want to decide whether to sell your house based on the reality of your situation—not what you hope the market will do.
if you’re looking to buy, the slowing price-growth rate is good for you, however, the high interest rates, are not so good for you. Make sure you are really ready to buy a home before you dive into the market. It’s essential to be prepared!
Homes are still selling relatively quick as there are more buyers than homes for sale. This is great news for sellers who are itching to sell quickly. Because of this, buyers, need to stay focused and act quickly when you finding a home that fits your budget and your family. It’s likely other buyers are interested as well, and it could sell if you wait too long to make a committment. Every market will be a little different depending on where you live, so you really need to be prepared.
The rest of 2022 could be a great time to buy a house, if you are well prepared. The rest of 2022 could be a really bad time to buy if you’re not thouroughly prepared. Keep in mind when buying a house of your personal finances and season of life.
The ideal time to buy a house is when you can check off these boxes:
- You’re debt-free.
- You have an emergency fund of 3–6 months of expenses.
- Your monthly house payment will be 25% or less of your monthly take-home pay on a 15-year fixed-rate mortgage.
- You have a down payment. A 20% down payment is ideal because you’ll avoid paying private mortgage insurance (PMI). But 5–10% is okay too if you’re a first-time home buyer. Just be prepared to pay PMI. And steer clear of FHA and VA loans—you’ll pay much more in interest and fees with them.
- You can pay the closing costs up front without stealing from your down payment.
In conclusion, the housing market is constantly evolving, and agents who know how to navigate the market are always in demand.