Whether you’ve just dipped your toe in the housing market or are fully in the process of buying or selling a home, you know just how much the market has changed since the pandemic. Inventory of homes for sale is at an all-time low, sellers are getting at or over their asking price, in addition to multiple offers. It can be an overwhelming and frustrating position to be in if you’re a buyer, but purchasing a home is still one of the most solid investments you can make.
We talked to real estate agents about what they’re seeing and what they want to see more of in today’s market to help buyers and sellers alike.
Current challenges to buying a home in 2022
In addition to the low inventory, there are other challenges homebuyers are faced with right now.
Interest rates
“If you’re a buyer in 2022, there are some obstacles, but I believe overall it’s still a good investment opportunity for the long term,” said Ralph DiBugnara, CEO of Home Qualified, a web series and digital resource for homeowners, buyers, and sellers. “The current higher interest rates will be at these levels most likely for the rest of the year, and the Federal Reserve has also already said that they will raise the borrowing rate multiple times this year.” This means higher rent (up 15% nationally already in 2022), so buying a home continues to be the better investment.
Locking in an interest rate, though, is key. “With inflation setting in, and now at record highs, locking in your housing cost is a very smart long-term financial decision,” DiBugnara explained.
Price
DiBugnara also said to expect to pay more than in past markets. “With a national shortage of homes, prices will continue to rise for the foreseeable future, with even higher rates.”
Charles Weinraub, the CEO of Handsome Homebuyer, agreed. “If you’re a buyer, be prepared to put the gloves on and get aggressive with offers,” he said. “As the largest fix and flip investor on Long Island, of the 19 houses I have listed for sale so far in 2022, not one has sold for less than the asking price and some as much as 20% over the asking price.”
It’s a good time to be a seller
If you’re thinking about selling your home and worried you may have missed the chance to get top dollar with rising interest rates, the good news is there’s still plenty of time.
“If you have a plan on where you are moving and have an actual house, condo, or apartment secured, then now is a great time to sell,” DiBugnara added. “Between a shortage of homes for sale, inflation, and backed-up buyer demand, the market for sellers may never be better. Bidding wars have become the norm on homes that are priced competitively, so as a seller, you will for sure get a premium in this market.”
How do we return to a healthy balanced market?
As demand continues to outweigh supply in record numbers and rising interest rates create even more demand as buyers “try to beat the increase in borrowing costs,” sustained increases “will most likely start to detract from the overall buyer pool,” according to Than Merrill, CEO of FortuneBuilders.
To keep people from opting out of the buying market altogether, Merrill explained that a few things need to happen. “For starters, more inventory needs to become available,” he said. “Homeowners need to be more inclined to sell, and new builds need to arrive sooner rather than later. Increasing available inventory will at least help alleviate competition, and perhaps even bring home values into a more acceptable range for buyers.”
Jumping into the market is not for the faint of heart if you’re a buyer. You have to be prepared to have patience, walk away from homes that are at the top of your budget (because they will likely go over asking price), and perhaps settle for a home that doesn’t have everything you’re looking for but does have the potential to get there with some remodeling projects. If you’ve considered building a home, now may be the perfect time to get in with a builder to discuss price, design, and timeline. While these homes are also going for higher prices than in the past due to lumber/material increases and the general market, it may allow you to get everything you want in a home and skip the bidding wars on existing homes. It may not be your original plan, but in this market, flexibility is everything.
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