If you plan on entering the Real Estate Market in 2022, you will want to be as prepared as possible. With the rising home prices, limited supply, affordability, plus other factors, the industry expects the unexpected.
According to Fannie Mae’s Home Purchase Sentiment Index, only 26 percent of consumers thought it was a good idea to buy a home in December 2021. A year earlier, that sentiment was at a healthy 52 percent.
The biggest reason for that decline? The rising home prices. Many prospective buyers joining the bidding wars were hesitant to purchase. Others are still on the hunt but waiting to see prices or rates move.
The good news is that industry experts see prices growing at a much slower pace or leveling out in 2022. As of December 2021, National Association of Realtors Chief Economist Lawrence Yun expects home price appreciation of 2.8 percent in 2022, a major difference compared to the 14.7 percent in 2021.
You may have already heard about or witnessed the limited supply and increased demand for homes in the current market. As the demand for houses supersedes supply, the prices naturally continue to rise as well.
The upside for prospective homebuyers to the weakened economy plus an increasing supply of properties is that it may equal a decrease in the speed of home appreciation. This could provide more opportunities for buyers who have yet to find homes.
With so many factors such as covid-19 and inflation, affording a home is still a dream for many. The average fixed mortgage rate is currently 5.109% for a 30-year fixed rate mortgage; This is a significant increase from the 3.56% at the beginning of 2021. Researchers from Business Insider suggest that there could be a ‘new normal’ as prices and rates rise – which will potentially have buyers pay significantly more than they would have a few years ago. However, if you have a home to sell, that property could also sell at a higher rate.
Over the years, offer letters have become the real icing on the cake when it comes to closing. Luckily, there are a couple of ways to make your offer stand out from the rest:
- Escalation clause: Having an escalation clause automatically outbidding any offer by a given amount up to a certain point
- Writing letters to sellers sharing details about yourself, why you love their home, and how you plan to care for it.
Just be sure to heir on the side of caution when writing letters in order to stay compliant with the Fair Housing Act.
Finally, having patience in such a hot market is key. Just in 2020, it was estimated that 8 weeks was the time frame it took to close on a home. In 2022 it could take at least 3 months, with 1/3 of buyers neglecting their search once they become outbid. It is a daunting task searching for your dream home, but it is possible. It is more important than ever to work with a trusted real estate advisor in order to get the best results in your home search.
*This article is intended to be accurate, but the information is not guaranteed. Please reach out to us directly if you have any specific real estate or mortgage questions or would like help from a local professional. The article was written by Sparkling Marketing, Inc. with information from resources like [Investopedia, NerdWallet, Business Insider]