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The housing market prices growth rate is alarming. House prices have been going up fast and the interest rates are changing, which has affected buyers, sellers, and even those who chose to remain put. How are these changes going to affect your housing plans in 2022?
Economists have started to get concerned about the housing market overheating because of the house price growth. The housing prices have been going up in 2022 with no sign of slowing down. People who are looking to buy homes have been shocked by the prices, and those selling have been pleased with how much money they are making.
The catch here is the prices in 2022 don’t determine whether it is best to sell, buy, or hang on to your house. The most important thing is choosing what is right for you.
When you keep an eye on the housing prices, you will be in a good position to know what to expect if you decide to buy or sell a home soon. The market conditions and house prices keep changing, which means the number can change at any time. It is important to know that the housing prices in your area can be a little different from what is discussed here.
The Average House Prices in 2022
The median house price in America was $392,000 early on when the year started, which is according to data compiled by The Realtor. This is an increase from 2021 where the median home price was $305,000.
It is important to keep in mind that the median means that half the houses sold were more than that and the other half less than that. It is better to use the median prices instead of the average house price. This is because a couple of highly-priced homes can easily throw off the average and it will make everything appear more expensive.
It is also important to note that the 2022 median house price includes newly built and existing houses. Existing houses tend to be cheaper compared to newly built ones, but the housing prices keep rising each year and this has been the case for a decade. According to experts, this trend is expected to continue.
What is Going to Happen to House Prices in 2021?
Prices have been going up for some time. When the year started, the house prices rose significantly. The National Association of Realtors released recent numbers that showed that it is expected that the house price in 2022 is going to be only 5.7%. You might be asking yourself why there is a slow-down in the growth of prices.
If the number of houses being sold goes up, the prices of homes are going to grow slower because buyers won’t have to compete for a select few homes. The number of homes for sale was at a record low. The housing market had 25% fewer houses compared to the previous year, according to statistics by The Realtor. The figure is going to change as the year progresses.
Another factor that can slow down the house price growth is the buyer demand going down. This is a real possibility because the Fed Reserve is going to increase its interest rates in 2022. The Federal Reserve doesn’t directly set the mortgage rates, but their hike often leads to lenders raising their rates. There are buyers who are going to back out of the market when the rates are too high. This can cause the price growth to slow down later in the year because it becomes harder to justify the increased house prices when fewer people are interested in buying.
If you plan to sell your house, don’t stress. The odds are in your favor, and you are most likely going to make a good profit because the average price in 2022 is higher compared to the last couple of years. If you had planned to sell your home once it doubled in value, then you should not count on it. It can take some time to determine if it is the right time to sell the home based on the reality of the matter instead of how the market is going to behave.
If you are considering buying a home, the house price growth rate cooling is a good thing for you, but the interest rates are not. You need to make sure you are ready to buy a house before you get into the housing market, whether you are looking to buy it this year or next year. Make sure you are prepared because it will make things easier for you.
2022 Home Price Trends
Most people know that location is one of the most important things, even those who don’t have experience with the real estate market. There are many other factors apart from the location that are going to affect prices in 2022. The median prices of homes change depending on many factors, which include the age and size of the house, buyer status, and region. It is not easy to predict how the market is going to break this year, but we can look at how the market has been doing recently.
There are many factors that affected house prices in the past year, so we are going to list them so you can know what to expect. Below are some factors that had an impact on last year’s house prices:
Age Of Home
The home you want to buy is going to significantly impact how much you are going to pay. A newly built home and a previously owned home are going to be different in terms of pricing. The median price last year for an existing home in the IS was $249,000. The median price for a new home was higher at $365,000.
Many buyers don’t mind buying homes that had been previously owned because it means they can afford them compared to a new one. Statistics from NAR show that for homes purchased in 2021, 85% of them were built in the median year 1993. The median year by region was;
Midwest – 1980
South – 2002
Northeast – 1972
West – 1997
Most individuals from the South bought new homes while most in the Northeast bought the oldest ones (provided the house is in a good condition, it is easy to make some changes)
You don’t always have to choose an old home when looking to buy. You can decide to get a brand new one provided you have the budget because new ones tend to cost more.
Size
In 2021, the median home size was 1,900 square feet with three bedrooms and two bathrooms. The median price of each square foot for these homes was $170. The specific circumstances and type of home a buyer was looking for determined how much it costs. First-time homebuyers and individuals buying previously owned homes bought houses below 2,000 square feet. The repeat buyers and those buying newly built homes bought houses above 2,000 square feet.
Buyer Status
Something interesting when looking at the data is repeat buyers bought homes that cost a median of $338,000, while first-time buyers purchased homes costing $252,000. Being married or single also has an impact on the price of the home someone chooses to buy.
Single women – $230,000
Single men – $249,000
Married couples – $350,000
What Do Current Prices Mean for You?
Now that you know the different factors that impact the change in home prices in 2022, what does it mean for you?
For Buyers
The current prices can seem intimidating for someone interested in buying a house. But seeing the home prices different types of buyers across the country are paying is not an indication that you need to look for a similar price range.
There are many options out there that are going to fit your price range. You don’t need to spend a lot of time stressing and worrying about the price trends. You just need to focus on your budget.
Make sure the mortgage payments on the property are less than 25% of your take-home salary, which will also include insurance, homeowners’ association fee, and taxes. When getting a mortgage to buy a home, go for the 15 years fixed-rate mortgage. This is because it is the cheapest and quickest type of mortgage to pay off. You should also try your best to save for the down payment, target 10-20%. If you can, put down a 20% down payment because it will help you avoid private mortgage insurance.
You should use a mortgage calculator to try out the different prices and establish whether you can afford a given house. Doing that is going to help in deciding how much down payment you need to make.
It is a good idea to hire an experienced and reputable real estate agent to help you with the process of finding the house within your budget.
For Sellers
Homeowners looking to sell are interested in finding how much they can expect to make when they sell their houses in 2022. The answer is going to vary because it depends on many factors, some of them include size, location, the equity you have in the house, and the age of the house. Sellers in 2021 made a median price of $85,000 after they sold their houses.
It is important to work with a real estate agent to make sure you get the most from your house. An agent is experienced and can do a competitive market analysis to determine similar homes in the market and how much they are going for in the region. This is going to help set the best price that isn’t too high or too low. They also know ways of attracting buyers. Their experience is going to help you avoid some of the most common mistakes people make when selling their homes.
They are also in a good position to help you with purchasing a new home if you want to move to another house locally. You should work with a professional when you want to sell and buy property at the same time.
For Homeowners
You might not be interested in selling your home in 2022 or any time soon. But it is a good idea to know how much equity you have in the home. It is important to have 100% equity, which means you fully own the entire home because you have fully paid for it.
The longer you live in a house, the more equity you are going to have. Here is a breakdown of the equity individuals had after they sold their homes in 2021 compared to how long they had lived in that home.
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 want to buy a retirement home or downsize in a couple of years, you are in a good position. If the plan is to keep your property, then you need to pay your mortgage to increase the equity you have in your house. When the value of the home increases, you may gain extra equity.
Buying or Selling a Home for The Best Price
One of the best tips when buying or selling a house is to hire a skilled and reputable real estate agent. When you partner with someone experienced in the real estate industry, you are going to get a lot of information about the process and they can help you find the best deals on a home if you are buying or getting the best price when selling.
You need to choose a real estate agent who is experienced in your local market because they will help you better. The agents have the skills and tools needed to find the best deal for you whether you are buying or selling your home. you will have peace of mind knowing you have someone experienced helping you.