Emerging Trends That Will Help Shape the Real Estate Market This Year
Navigating buying a home this year may not be as difficult as it was last year. With the competitive market growing, people are wondering if there is any relief in sight from the sharp increase in home prices. Last year there was a perfect storm of supply constraints, low-interest rates, and record high demand that led to a sharp increase in home prices. This year’s outlook is better. Understanding the ups and downs of the current market will help any buyer or seller determine if this is the right time to buy or sell a home.
Whether you are looking to buy your first home, looking to relocate, or selling your home, there are several real estate trends in 2022 that you should be aware of.
Mortgage rates will continue to rise. They have been on the rise since reaching an all time low of 2.65%. Experts expect the rates to slowly rise throughout 2022. Nobody likes rising interest rates, but keep in mind that they are rising from historically low levels. Experts from Fannie Mae, NAR, Redfin, and other industry leaders believe that 30 year mortgage rates could go as high as 4.5% in April. Additionally, none of them expect the interest rates to stay below 4% for any sustained period of time.
If you have not locked in a rate, you can still get a great deal, particularly if you have good credit. Be sure to shop around and find the best lender for your financial situation. The rate a lender offers an individual actually depends on your credit score and history, your personal finances, your down payment, your loan to value ratio, and your debt to income ratio. Once you fill out a loan application, lenders will check your credit, and verify your income and debt. Then they will give you your individual rate quote, based on your financial situation. It is recommended that you get 3-5 of these quotes so that you can compare them and find your best offer.
There will be a better balance to the housing market. In 2021 there was an unprecedented surge in buyer demand, which resulted in a lack of inventory. There will be a greater selection of houses in the market this year. It will not be enough to become a buyer’s market, however there will be less of a bidding war for homes. The slow increase in home prices will likely discourage some from even entering the market, opening the door for more first time home buyers.
Buyers and Sellers will benefit from a more stable housing market. The unprecedented pace of home appreciation is expected to slow significantly in 2022. This does not imply a drop in prices, but a slowing down of the current rise in prices. A more stable market will allow for better planning and budgeting for home buyers. While home price appreciation is good for net worth, the annual payments due to increasing principal, interest, taxes and insurance can lead to overall housing costs becoming a larger percentage of the household budget.
There will be an increase in new home construction. Previously, in 2021, building supplies and labor were in short supply, contributing to home-builders’ inability to keep up with the demand for new construction. Home builders will have less difficulty with material shortages and should be able to pick up their pace to keep up with the demand. There is a huge demand for this market, so this is good news for home buyers.
Mental health spaces and home office features are in demand. The last two years have made home owners and potential home owners rethink their priorities in a home. Thoughtful wellness designs will be prominent in new homes. Features such as spa-like bathrooms with freestanding bathtubs and meditation rooms will come at a premium. Natural light in a home is sought after as well. Large office spaces that allow for remote work will be expected in new construction. Sellers should consider staging a room as a home office, if it doesn’t already have one. More and more of the workforce across the country is working from home now.
The demand for more space inside and outside of the house will continue. People are spending more time at home and want more space. More buyers are looking for homes in suburban areas and single family homes are trending larger. The last two years of restrictions have made many home buyers crave the outdoors. Yards, lawns, and patios have become even more important features people look for in a new home. Aside from affordability, homeowners want to know that buying a house in a particular area will contribute to their quality of life. This means choosing neighborhoods that are walkable and provide spaces for exercise and walking pets.
Regardless of the trends and predictions, it is important to be financially prepared before buying or selling a home. Examine your budget before starting a home search. Increasing mortgage rates and home prices will affect affordability and monthly payments, so be sure to have a predetermined budget ready. Fairly priced homes are available, and the competition to buy is slowing down.
Boyle and Kahoe can help you find the perfect location and housing features whether you are moving to a completely new area or staying close to the office.
Finding a reliable real estate agent and lawyer may help ease the burden of buying or selling your home. Boyle and Kahoe Real Estate was founded in April 2019 by Jessica Boyle Tsottles and Robert Kahoe. The brokerage foundation is based on a strong passion for real estate and helping connect clients to the right properties. Jessica Boyle Tsottles is an experienced Realtor in Harford County, and Robert Kahoe is an experienced attorney focusing on real estate, estates and trusts. Together, the two are blending their vast knowledge bases together in a brokerage that will be able to handle any real estate transaction.