The housing market has seen dramatic changes over the last two years. The pandemic caused a dramatic shift with a lack of labor for builds. This caused a major shift of low supply and high demand.
It's been a seller's market, as the asking prices were higher than the value of the homes themselves, leaving buyers in a tough position.
As we prepare for the turn of 2022, many people are wondering what they can expect to see. The experts have shared their predictions, and it's looking better than we thought.
Since most people have been working from home since the pandemic, many first-time homebuyers who originally wanted to live in the city are turning to the suburbs.
They're preferring the cheaper cost of living, as well as being more conducive to their newly adapted lifestyles.
Those interested in commercial real estate investing will also see a major turn. The pandemic caused inflation, but investors might want to rethink their strategy by investing in inflation.
According to Crown Commercial Property Management, "multifamily housing appears to be a golden opportunity as money devalues, wages increase and the housing crunch continues."
Due to the increase of homes being built, real estate experts are saying they expect to see a decrease in the overall home prices. The average cost of a house in 2021 was around $380,000-around 16% higher than the average home in 2020 pre-pandemic.
They predict this percentage will decrease to around 5% to coincide with the affordability needs of people who are still recouping.
Higher Interest Rates
Right now, interest rates are at an all-time low. This has prompted many homebuyers to consider purchasing homes, regardless of the inflated prices. As the supply increases, lenders will expect to increase interest rates to compensate.
This doesn't necessarily bode well for buyers, especially if you're looking at a conventional loan. It might mean less of a down payment, but how much you pay over time could dramatically increase, keeping you in debt longer.
Rates will remain low for a while. But if you're in the market to buy and you don't have the option for a VA or USDA loan, you'll want to consider doing this sooner rather than later.
Less Chance of Market Crash
Real estate experts are blown away by how quickly we were able to come back from the pandemic. In 2008, our economy experienced something terrible which took us years to come back from.
Many believe it's due to the relief provided by the government which gave some families an opportunity to stay afloat. Despite the expected increased interest rates, there is no current prediction for the housing market to crash any time soon.
Should I Buy Now?
The question now is whether or not you should wait to buy or take advantage of the currently low interest rates. In short, it's best to consider your financial situation. Always look at the 30/30/3 rule.
Monthly mortgage rates should never exceed 30% of your gross income, obtain a 30-year mortgage, and get quotes from different lenders to have no more than a 3% fixed interest rate.
If you can't afford this now, it's in your best interest to wait. Rent until your financial situation changes or you've saved enough money to compensate.
What About Refinancing?
Since we're currently in a seller's market, homeowners looking to refinance couldn't pick a better time to do so. With homes selling at a higher value, you may have more equity on your hands regardless of your original downpayment. More equity can, in turn, help to lower your interest rate.
Speak with your lender first and go over your options. They'll need to do a re-appraisal of the house to see if the value of the home has increased.