How Much Will It Cost to Buy a Home in 2022?
You want to buy a home. Maybe you’re a renter and want to buy your very first home. Or perhaps you want to upgrade and move into a larger home or a brand-new construction home. You might need to move for your job, or you may need or want to downsize to simplify your lifestyle.
Whatever your situation, the increase in housing prices has been something to witness in the last year, due in large part to the effect of COVID-19 on the economy. The question now is, how much will it cost to buy a home in 2022? Is it better to buy a home now or wait? Before we answer these questions, let’s look at what the housing market has been like in 2021.
Home Buying Costs in 2021
Even before the COVID-19 pandemic hit, the supply of houses on the market was low compared to demand. Once the lockdowns started, people began to look at buying homes in different areas. Some wanted to get out of the city, some wanted to move to a new job or to a home that gave them a better home office setup. Others simply didn’t want to miss out on buying a new house while they still could.
This scenario caused housing prices to increase by over 17% from June 2020 to June 2021. And the month of September 2021 saw a year-over-year price increase of 18%. So, even though mortgage interest rates have been some of the lowest ever seen at 2% to 3%, the high cost of purchasing a house can still make buying a challenge. But will that last into 2022?
How Much Will It Cost to Buy a House in 2022?
The unfortunate reality is that housing costs will continue to rise into 2022, albeit at a slower rate. According to the National Association of Realtors, the price of home in 2022 will increase by 5.5%, and Zillow predicts an increase of 11.7% from August 2021 to August 2022. However, predictions differ, and Goldman Sachs foresees a price increase of 16% through 2022.
All of this means if you wait until next year to buy a home, you may very well be paying more for it than if you were to buy this year. Of course, the price of a new home may not be your only consideration and making this decision will be based on your personal situation.
Should You Buy Now or Next Year?
Naturally, when wondering how much it will cost to buy a house in 2022 and whether you should buy now or wait until next year the decision should be based on your personal circumstances. If you are absolutely ready to buy now, it may be in your best interest to do so.
Aside from lower housing prices, buying now may also mean being locked into a lower interest rate than if you wait, because while interest rates are at a 60-year low, that could change at any time. It may also benefit you to buy now if you need that home security at a time when jobs are still being affected by the COVID-19 pandemic.
However, having said all this, there are fewer homes on the market and bidding wars can drive the price up more than you are willing or able to pay, whereas if you wait until 2022, you might have less competition as inventory goes up.
There Is Hope for 2022 Home Buying Costs
Fortunately, the forecast for 2022 is not all doom and gloom for buyers. The number of unsold homes has increased slightly (an increase of 3.3% from May to June 2021), meaning some buyers are having a hard time selling. In some areas, such as Southeast Michigan or Los Angeles, buyer demand is dropping enough that competition is less fierce.
While this doesn’t completely compensate for the high demand, it does mean that buyers might soon begin to have an advantage in terms of options. In the end, this may spur sellers to lower their prices.
In the end, no one really knows for sure when housing prices will go down enough to shift it from a seller’s market to a buyer’s market. You will need to weigh your own situation carefully to determine whether you should buy house now, next year, or perhaps wait to see what 2023 will bring.
Reach out to Centex today if you have more questions about how much it will cost to buy a house in 2022 or if you have any other questions about buying in today’s housing climate.
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