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Should you Buy a House in 2022?

2022 housing marketing prediction

If you’ve watched the housing market at all over the last 2 years, you’ve probably been in shock. House values skyrocketed, mortgage interest rates fell, and everyone was tripping over one another to buy a house.

Will the trend continue or is it smart to buy a house in 2022?

Check out the real estate market predictions below.

Will the Real Estate Industry be as Busy?

Here’s the good news – things should settle down a bit in the real estate industry in 2022. There won’t be as high of a demand for houses, which means prices won’t skyrocket like they did this last year.

That doesn’t mean there won’t be high demand and/or bidding wars, though. The trend may continue, just not at as crazy of a pace as it did last year. In other words, you won’t find as many houses selling for more than they are worth like we’ve seen. It should level out so that the ‘everyday buyer’ can afford a home this year too.

This doesn’t mean it’s not a seller’s market still though. Inventory is at a lower level than what buyers want, so there will be more interested buyers in most properties, but the sales prices should remain reasonable.

Will Home Prices Increase in 2022?

Like most years, home prices will increase in 2022, but not at crazy rates. According to the National Association of Realtors, 2022 housing prices are expected to increase 2.6% which is much lower than the previous almost 15% increase we saw in 2021.

The increase is natural, thanks to inflation, but the rate house prices are expected to increase is much lower than what we’ve seen.

A 2.6% increase on a $200,000 house, for example, is just a $5,200 price increase which works out to $22 a month on a 30-year mortgage at 3%.

Will you Get a Higher Mortgage Interest Rate in 2022?

Just like housing prices increase, mortgage rates are expected to increase too. Over the last year, we saw the lowest mortgage rates in decades, which of course couldn’t last forever. Fortunately, you will still be able to get a favorable mortgage interest rate in 2022, though.

Each agency predicts a different level of increase in mortgage rates for 2022, but overall, it doesn’t look like rates will get any higher than 4%.

The average rate prediction between Fannie Mae, Freddie Mac, the Association of Realtors, and the Mortgage Bankers Association is 3.5%. If you borrowed $200,000 on a 30-year term, that’s a $55 difference per month so it’s not the end of the world even though 3.5% sounds a lot higher than 3%.

Questions to Ask Yourself Before You Buy a House in 2022

If you wonder ‘should I buy a house in 2022,’ ask yourself these questions.

Do I Have Money Saved for a Down Payment?

Down payments are an essential part of buying a home. Sure, you could find programs with no down payment, but most people need 3% - 5% down, plus closing costs. The more money you have available to put down and pledge as earnest money for the seller, the higher your chances of having your bid accepted.

If you don’t have money saved for a down payment and you don’t have reserves (money set aside that you won’t’ use for the down payment), you may want to wait until you have more money set aside for emergencies and investing in your home.

Am I Ready to Settle Down?

Buying a house requires a bit of a commitment. Unlike renting, it’s not easy to move every year. Ideally, you should stay in your house for 5 years for the investment to pay off. By this point, you’d pay a good chunk of your principal balance down and have equity in the home from its appreciation to walk away with a profit.

If you haven’t found ‘your spot’ yet or aren’t sure where you want to work and settle down, you may want to wait. But, if you’re ready to settle down, start your career, and maybe even a family, you should buy a house in 2022.

Can I Afford the Monthly Payment?

When you own a house, not only must you make the mortgage payment, but you must also pay your real estate taxes and homeowner’s insurance.

Make sure the monthly payment is affordable for you, and that there’s some wiggle room should your taxes or insurance increase through the years. If you take a fixed rate mortgage, you don’t have to worry about the mortgage payment changing, but most real estate taxes increase over time as does insurance premiums.

Are you Ready to Negotiate?

Since 2022 will likely still be a seller’s market, you need your sharp negotiating skills. It’s best if you us a real estate agent to do it for you, but you must still know what (if anything) you’ll negotiate.

A solid offer includes not only the right price, but also the terms sellers want to hear. If you’re willing to negotiate and counteroffer, you’re ready to buy a house in 2022. With more buyers than sellers in the market still, you must be creative and willing to offer sellers what they want to set yourself apart from the rest.

Final Thoughts

If you’ve asked, ‘should you buy a house in 2022?’ it can be a great time to do it! People who were outpriced during the last 12 months may find it more affordable to buy a house this year even with rising real estate prices.

The demand will be lower so the excessive bidding over a home’s value will stop, and mortgage interest rates are still very affordable. With your qualifying factors in line, it’s a great time to jump on board one of the largest investments of your lifetime. If the trends continue, your house will appreciate, and you’ll earn equity in your home just by investing at the right time.


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