Are you wondering if you should buy or sell your home in 2022? White & Associates believes that honesty and integrity should always be at the core of all real estate transactions and dealings with all buyers and sellers. The plain and simple truth is that the market has been shifting, and you’ve probably felt the effects. It is no wonder that times can feel a little uncertain with elevated prices at the gas pump, higher grocery prices, increases on everyday purchases, and about a 2 point increase on 30-year fixed rate mortgages. This is why we feel that it is important to dispel some of the myths and rumors surrounding the real estate market today.
Although nobody has a crystal ball that can tell you exactly what the future will be, the truth can still be found in some realities that will not change regardless of uncertain times. For instance, people will still be buying and selling homes, as they always have. However, it is also important to realign expectations, because the real estate market today and tomorrow will not be like how it was over the past couple of years.
Should You Buy or Sell Your Home in 2022?
The Federal Reserve Bank, whose purpose is to promote price stability, economic growth, and fostering a sound financial system, recently indicated that there will likely be higher mortgage rates than the historically low rates that many enjoyed over the past few years. One of the key considerations is that the historically low-rate mortgages were not set during a time of high inflation, like that which is currently being faced in 2022. In our current economy, inflation right now is one of the key drivers in the rise of interest rates. This is because all fixed mortgage debt is nominal, meaning that it does change for factors like inflation.
So on one hand, if you are holding a mortgage at a lower rate than the current fixed rate, you’re probably enjoying a good deal. On the other hand, if inflation causes all prices to rise, especially including wages, then one might consider that new mortgage rates to be a good deal even with higher rates because of inflation. So really, whether it is a good time to buy or sell is really based on your individual circumstances. Although past performance is no promise of future performance, it is important to consider that high inflation will likely not last forever. Historically speaking, if inflation remains around it’s estimated rate of about 8%, it will be the first time and only time in 30 years where inflation was over 5%.
If you’re ready to buy or sell your home, or not sure if it’s the right time for you, contact Stephen White for a professional home evaluation. If you prefer to know for now the value of your home, you can sign up here for a free monthly home evaluation tool provided by White & Associates.
How has the market changed?
From 2019 to early 2022 mortgage rates were at all time and historical lows. This meant money was “cheaper”, which allowed people to afford more. In this market, both buyers and sellers were winning. People were able to afford more home with low mortgage rates, which meant more buyers in the market. With more buyers, more sellers took the opportunity to capitalize on the increase in demand. This caused bidding wars on homes, with many houses barely being listed for more than a week or two before having multiple buyers regardless of the condition of the home, and oftentimes for well over the asking price. While mortgage rates were likely set to have increased earlier, Covid continued to suppress rates even longer. Raising mortgage rates during Covid would have likely caused greater economic turmoil, which was likely one of the reasons for this short-term windfall.
With mortgage rates poised to be at a higher elevation for the foreseeable future, the market turbulence and higher rates meant less buyers. Consequently, like Sir Issac Newton’s third law of equal and opposite reactions, sellers saw the drop in demand and reacted accordingly by retracting from listing right away. This happened relatively quickly, likely due to the fact that technology today puts more real-time market stats in the hands of more people. This has empowered people to make better decisions faster, which is likely how the market as a whole was able to move so fast. This has brought an overall balance to the supply and demand side at its current state, with less housing demand equaling less housing supply. Quite understandably, with less buyers in the market means that houses will likely stay on the market a bit longer than last year.
This brings into focus the tried and true rules and fundamentals of real estate taking center stage again. One of them being all about location, location, location. In the slower market, housing prices are likely to be a mixed bag as a trend towards normalizing or “right sizing” of housing prices will likely occur as the dust starts to settle. Even in the near-term with higher mortgage rates, some neighborhoods are still seeing housing prices rise. As long as the housing market stays in equilibrium within a given neighborhood, there will also likely be stability in some housing prices. For others, some housing prices will fall, likely due to factors related to location and the condition of the home. Did you know that with Compass Concierge services, our team will help you with home improvement services with no interest, to help you get the most money for your home? Contact Stephen White to learn more about Compass Concierge Services.
How has the market changed?
- With high inflation, there will likely be higher mortgage rates than the previously historical lows
- With less buyers in the market, there will also be less sellers too
- Houses will likely stay on the market a bit longer than last year
- Housing prices will go up, stay the same, and down depending on the location and condition of the home
- Home improvement and staging will become more important to getting the most value for your home
Stephen White has years of experience in real estate, and he has helped his clients navigate the market when times have been easy and when it’s been hard too. If you’re ready or thinking about buying or selling a home, Stephen White and his team are ready to assist you in finding the home that is right for you. Contact Stephen and his team to get started or learn more today.