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The rate at which the housing market prices are growing is alarming. Home prices have been soaring and the mortgage interest rates changing, affecting sellers, buyers, and even those choosing to stay put. So how will all these changes affect your 2022 housing plans? Keep reading to learn more.
Housing economists are concerned that the housing market may overheat due to the home price growth. In 2022, home prices have been going up with no sign of slowing down. Anyone buying a home is probably shocked by the exorbitant prices, while those selling are probably pleased about how much money they will make.
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But there’s a catch: The average 2022 housing price in no way determines whether this is the best time to hang on to your house, sell, or buy a home. You ultimately get to choose what is right for you.
Yes, you got that right. By keeping an eye on the housing prices, you can have a clear idea of what you should expect if you plan to sell or buy a home soon. But with the constant change in home prices and market conditions, these numbers can also change at any moment. It is essential to be aware that housing prices in your area can be slightly different from what we are discussing here.
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With that covered, let us get into the 2022 home price trends.
What Is The Average Home Price In 2022?
According to data compiled by The Realtor, the median home price in America was $392,000 early on when the year started, a price up from $305,000 back in 2021.
It is worth noting that the median means about half of all the houses in America sold for less, and the others sold for more. It is far better to look at the median house prices instead of the average. A few highly-priced homes can throw off the average, making standard houses appear more expensive.
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For clarity purposes, the 2022 median home price includes existing and newly built houses. Generally, existing houses are usually cheaper than newly built ones, but the housing prices across the board keep going up each year and have been doing so for a decade. Unfortunately, experts expect that this trend will continue.
What Is Expected To Happen To Housing Prices in 2022?
Home prices have been going up for a while now. When the year began, there was a significant increase in home prices. According to recent numbers released by the National Association of Realtors (NAR), it is expected that there will only be a 5.7% increase in the prices of homes growth in 2022. You may be wondering why there is such a slow-down in the growth of prices.
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Well, if the inventory (number of houses for sale) goes up, then the prices of homes can grow slower as buyers will not be competing hard for a few selections of homes. Early in 2022, the number of homes for sale was at a record low. Statistics by the Realtor show that the housing market had 25% fewer houses than the same time the year before. This figure will likely change as the year progresses.
The buyer demand going down is an additional factor that can slow down the home price growth. This is an actual possibility as the Federal Reserve will be increasing federal interest rates in 2022. Overall, the Federal does not set mortgage rates directly, but the hike in federal rates often makes mortgage lenders raise their rates. Some buyers will back out of the market altogether to avoid these high rates. As a result, the price growth will likely slow down later in the year as it is hard to justify the increase in prices when few people are interested in buying homes.
Do not stress if you plan to sell. The odds are still in your favor, and you will likely make a decent profit since the 2022 average housing price is higher than in the last couple of years. On the other hand, if you have been waiting to sell when your home doubles in value, you should not count on that. It may be time for you to establish whether it is time to sell your home based on the reality of the matter rather than what you expect the market to do.
If you plan to purchase a home, while the price growth rate cooling is an excellent thing for you, the interest rates are not. It will be best to ensure you are ready to purchase a house before getting into the housing market, whether this year or a different year. It would help if you were prepared.
2022 Home Price Trends
Even without having experience in real estate, most people are aware that location matters. Other than location, several other factors will affect home prices in 2022. The median prices of existing homes change depending on different factors, including buyer status, the size and age of the house, and region. It is hard to predict how this year’s market will break, but we can have a look at what the market has recently been doing.
Several factors have affected the home prices over the last year, so we will list them so you have an idea of what may happen this year. Here are common factors that impacted the home prices last year:
-By Region
Region Price Versus last year
Midwest $249,000 Up 8%
South $319,000 Up 18%
Northeast $384,000 Up 7$
West $513,000 Up 7%
Housing prices vary greatly depending on the part of country you are buying your house. The Midwest has some of the cheapest homes, while the West Coast’s homes sell for some of the highest prices.
– By Age Of Home
The type of home you decide to purchase significantly impacts how much you pay. A newly built home and a previously owned home differ in price. Last year, the median price for an existing home in America cost $249,000, while a new home cost $365,000.
Plenty of buyers have no problem purchasing and staying in a previously owned home if it means getting it at a lower price. Statistics by the NAR show that 85% of the purchased homes from 2021 were built in the median year1993. Here is a breakdown per region:
Region Median year a house was built
Midwest 1980
South 2002
Northeast 1972
West 1997
Most individuals in the Northeast bought the oldest homes (if the house is in good condition, you can always make some changes), while individuals from the South bought new homes.
You do not have to buy an old home. You can always purchase a brand new home as long as you have the budget, as new homes tend to be quite costly.
– By Size
The median home size in 2021 was 1,900 square feet with two bathrooms and three bedrooms. The median price of these homes for each square foot cost $170. The type of home a buyer wanted and their specific circumstance determined how much house they got. Individuals buying previously owned homes and first-time homebuyers bought houses below 2,000 square feet. Those buying newly built homes and repeat buyers bought houses above 2,000 square feet.
– By Buyer Status
One of the interesting factors is that while repeat buyers purchased homes costing a median of $338,000, first-time buyers bought homes costing $252,000. Being single or married also influences the price of the home you choose to buy. Here is a breakdown:
Buyer status Home price
Single women $230,000
Single men $249,000
Married couples $350,000
What Do The Home Prices Today Mean For You?
Now that we are aware of the various things impacting the change in 2022 home prices, what does this mean for you?
For Buyers
The current home prices look intimidating to anyone planning to buy a house at the moment. But seeing the home prices of what different individuals around the Nation are paying is not an indication that you should buy a home in a similar price range.
There are different homes available that may fit your price range. So, instead, stop worrying and stressing about the pricing trends. Focus on your specific budget.
Your new home’s mortgage payment should cost 25% less than your take-home salary, including homeowners’ association fee, insurance, and taxes. It is essential to get a 15 years fixed-rate mortgage when getting a mortgage. This is the quickest and cheapest type of mortgage to pay off. It will be best to put at least 10% to 20% down. We recommend putting down 20% if you can, as it is a better choice that prevents you from paying private mortgage insurance.
Consider using a mortgage calculator to test the different home prices to establish the house you can afford. Doing so also helps you decide how much down payment you require and begin to save for the down payment.
It would be best to hire a skilled and reputable real estate agent as they can help find you a house within your budget that you will love.
For Sellers
Most individuals selling their homes are interested in finding out how much money they can make when they sell their homes in 2022. The answer will vary depending on several factors, including the location, size, your home’s age, and the equity you have in your house. Overall, in 2021, sellers made a median price of $85,000 after selling their homes.
It is vital to work with a real estate agent in your area to ensure you make what your house is worth. A real estate agent will conduct a competitive market analysis to determine what homes similar to yours are going for in the region, ensuring you set the appropriate price. In addition, they also know different other ways to attract buyers and can help you avoid making common home selling mistakes.
A real estate agent may also be in a position to help you purchase a new home if you plan to move locally. It is always excellent to have professional help when selling and buying property simultaneously.
For Homeowners
As a homeowner, you may have no immediate interest in selling your home in 2022 or the foreseeable future. But it is essential to be informed about how much equity you have in your house. It is vital that you have 100% equity, as this means your house is fully paid for, and you own the entire home.
The general rule is the longer you live in your home, the more equity you will have. Here is a breakdown of how much equity individuals had after selling their homes in 2021 in comparison to how long they had lived in that home:
Time in home Equity
– 5 years or less $45,000-$73,000
– 6 to 10 years $91,000-$104,000
– 11 to 20 years $67,000-$114,000
– 21 years and more $182,000 or more
If you plan to downsize in a couple of years or buy your retirement home, you may be in a good position. If you plan to keep your property, it is still essential to pay your mortgage to build your equity. You may gain extra equity if your home value increases.
How To Buy Or Sell A Home For The Best Price
The key to selling a house or buying one for the best price is hiring a reputable and skilled real estate agent. Partnering with a professional knowledgeable in the industry means they will get you the best deals on a home if you are buying and the best price for your property if you are selling.
Do you want to work with the best real estate agent in your market? These agents are experienced and will prioritize your needs and help you get the best deals depending on your specific financial situation.
We can help you find a real estate agent near you!