Home Buyer Forecast for 2022
Balls have dropped. Calendars on the walls have been replaced. 2021 is now past tense. It is the time of the year where we spend several weeks getting used to writing 2022 on any document that requires a date. For some, you are making steady progress in this new year toward your resolutions. For others, you are already counting the days until you make a whole new bath for 2023. Depending on the resolution the team here at Peoples Choice Mortgage is probably not qualified to help you keep them there. After all, we are mortgage brokers not fitness trainers. However, if one of your resolutions was to buy a house in 2022, then we are definitely qualified to help you with that. To help you home buyers with that resolution we are here to tell you what to expect from the mortgage and real estate industries in 2022.
Mortgage Rates are Moving Higher in 2022
Home buyers have been blessed with record low mortgage rates in 2020 and 2021. Unfortunately, those record lows did not last forever. In the second half of 2021 and all the way through this week we have seen mortgage rates creep higher. To be honest, there were very few that were shocked that mortgage rates did not stay at their historically low levels. Mortgage rates fell down to such basement levels because the Federal Reserve slashed interest rates to nothing in order to deal with the economic impact of the pandemic. However, rising inflation is causing the Federal Reserve to reverse its course and has pledged interest rate increases over the next year. What do these interest rate increases mean for mortgage rates? How high do we expect mortgage rates to go in 2022?
Experts agree across the board that mortgage rates will continue to rise in 2022. This is an important trend that home buyers must monitor and should provide some urgency. Mortgage rates will probably not be lower than they are right now. This means if you’re a home buyer and want to save money over the life of your home loan, it is best to buy now. However, it is important to keep tomorrow’s mortgage rates in the context of mortgage rates from years past. According to Odeta Kushi, Deputy Chief Economist of First American, “Consensus forecasts put rates at about 3.7% by the end of next year.” That is significantly higher than today’s rates. However, Kushi goes on to add, “that’s still historically low, but certainly higher than they are today.” Basically, today’s bargains will be gone tomorrow, but rates are still historically great for home buyers.
Inventory Will Rise in 2022
Housing inventory has been another trend that has impacted home buyers and homeowners. Throughout the pandemic housing inventory reached record lows and then it kept going even lower. Home scarcity combined with high demand due to low mortgage rates sent home prices through the roof. This has been a double-edged sword. On one hand, it has been great for homeowners who have seen their home values shoot up. Right now, many homeowners are flush with home equity. On the other hand, it has created difficulties for home buyers. Not only is it causing prices to rise, but it has also led to bidding wars for available homes. With that being said, what will happen to inventory in 2022? What will it mean for home buyers?
Many experts believe that home inventory will increase in 2022, which will be great for home buyers. According to Lawrence Yun, Chief Economist for National Association of Realtors, inventory will increase. This is important because, according to Yun, “With more housing inventory to hit the market, the intense multiple offers will start to ease.” George Ratiu, Manager of Economic Research at realtor.com agrees. According to Ratiu, “We also expect a growing number of homeowners to bring properties to market.” Ratiu believes that the increased inventory will be “taking some pressure off high prices and offering buyers more options.” Basically, home buyers should be excited. More inventory means less bidding wars. On top of that, it seems likely that home prices will not skyrocket much longer.
Inventory can sometimes increase too much, which can then become a problem for homeowners. If house inventory grows to the point where it outpaces demand, then it can lead to home prices decreasing. In turn, homeowners will see their home values decline. However, experts do not seem to worry about this. Again, mortgage rates are rising, but not to the point where home buyers will be dissuaded. According to Mark Fleming, Chief Economist, First American, demand will remain strong. Fleming believes that, “Strong demographic demand will continue to act as the wind in the housing market’s sails.” Yun agrees with Fleming who thinks we will experience a goldilocks scenario. According to Yun, “Home prices will continue to rise but at a slower pace.” This would be a perfect balance. Home price increases slow, which provides relief to home buyers. However, prices still rise, which is great for homeowners. Everyone wins.
Final Thoughts
The bottom line is that 2022 is lining up great for home buyers. Rates will increase, but will still be at an extreme discount compared to historical rates. At the same time, inventory will increase which will mean that it is easier to buy a home without as many bidding wars. This is great news for home buyers. If you want to stop renting and become a homeowner, 2022 is a great year for it. However, the earlier you can do it the better it will be for you in terms of interest rates if the experts are proven true. So if you are in a position to buy a house now, you should.
How do you know if you are ready to buy a house? The answer is simple: contact us right now! The mortgage professionals at Peoples Choice Mortgage will look at the full picture and help guide your choice. We offer complimentary mortgage qualifiers to all home buyers, which will let you know how close you are to buying a home. The truth is that many people are closer to buying a home than they realize. If you have any desire to be a homeowner, do not disqualify yourself. Speak to our team and get an accurate idea of how close you are to making your home buying dream a reality.
