Short answer, yes.
Long answer, keep reading!
In 2021 the housing market was booming with low-interest rates and houses were flying off the market. These low-interest rates led to 6.1 million homes being bought and sold in 2021, according to Statista. In 2022 we are seeing a different market that is being impacted by inflation and increased interest rates. These factors have caused people to question if it is a good time to buy a house. There are a lot of things that can make this decision feel overwhelming. Let’s get the facts straight and analyze if 2022 is a good year to buy a house.
First, let’s address the elephant in the room. Is the housing market going to crash? Is there a housing market bubble? Are we doomed in 2022 to repeat the mistakes of 2008!? Take a deep breath. Across the board, real estate experts are not seeing trends that point to another housing bubble. The market is expected to remain strong due to many factors. First off, in 2008 we saw demand fall way behind supply. Currently, we are seeing the opposite. Demand – although it has cooled off somewhat – is still relatively high while inventory is low. According to finance expert and real-estate investor, Dave Ramsey, “There are now five million more Millennials in their mid-30s than compared to 2006 when Generation X was in their mid-30s.” This means there are five million more home-buying-aged millennials who could potentially be in the market. What you should hear when you read this is that there are five million more eligible homebuyers in the market today than there were in 2008. While supply remains constrained by supply chain issues, demand is not slowing down. So, another way to say this is the situation that took place in 2008 is very different than the situation we’re seeing today. Supply is relatively low, while demand remains consistently high. To go back to the first question, is the housing market going to crash? – it does not seem like it’s likely to.
But what about these rising interest rates? The federal reserve has increased interest rates in hopes of reducing inflation. Because of this effort to tame inflation, mortgage rates are now being impacted by these rising rates and people are concerned. Let’s take another deep breath. The rates in 2021 were historically low, around 2%. This means that rising rates are now bringing mortgage rates to a normal number around 5-6%. With these rising mortgage rates, some competition will fall off and the housing market should become more balanced than it was in 2021. This will increase your chances of getting the house that you desire. We advise that you review your budget, with current interest rates in mind, and analyze if this is the time for you to buy a house.
In conclusion, home trends and predictions are subject to change. It is best to take your time, do your research, and budget according to what you can afford. The market is ever-changing, and home buying is highly personal. If you strictly desire to base your decision on the current market, now is still a good time to buy a home. You can lock down a reasonable interest rate and have less competition than in 2021. If you need help with this process reach out to us via email at [email protected]. We would love to help you with your search or answer any questions that you have in regards to the home buying process.