What You Need to Know About Owning a House

14 Min Read | January 17, 2022

Wow, 2021 was a wild year! With and then much happening beyond the land and costs on the rise, you lot might exist wondering how information technology'll impact real manor in 2022.

Will we encounter more skyrocketing home values? How volition the real estate market place milk shake out in our current economic climate? Whether yous're selling, ownership or staying put, hither are the 2022 real estate trends to spotter!

Real Estate Trend #1: Slim Pickings for Abode Buyers

Okay, this is probably the hardest real estate tendency to eat—so caryatid yourself: Inventory is incredibly depression! Inventory (aka the full number of unsold houses) was downwardly just over 16% in November 2021 compared to the previous year.¹

That's partly because a ton of people are looking to buy correct now. Information technology's likewise because fewer sellers are listing their houses for sale.² Notwithstanding you slice it, there just weren't many houses for sale over the year, and then it was harder to meet heir-apparent need.

But don't worry, we'll walk yous through what to expect if you lot enter the market place.

What Slim Pickings Mean for Buyers

Low inventory means you need to be on your toes when you get business firm hunting because the best homes will probable exist snatched up fast. Near the finish of 2021, most homes spent 47 days on the real manor market—around 10 days less than the by year.³ And it looks similar homes will go along selling chop-chop in 2022.

Observe expert agents to assist you purchase your home.

That doesn't leave much time to hem and haw over your dwelling house search. If you want to observe a good home in this slim market place, here'southward some advice:

Sacrifice some wants. If you can't find the house you want, exist willing to give up some "prissy-to-haves" for your "must-haves." Observe the to the lowest degree expensive dwelling in the best neighborhood you tin can afford and upgrade over time.

Aggrandize your search. Is the location where you plan to purchase too competitive? You might be surprised at the gem yous can find in a less popular neighborhood. Working with a real estate agent who really knows the area is the best way to find a dwelling house that fits your upkeep and lifestyle.

Go preapproved ASAP. Getting preapproved for a mortgage before you go house hunting is a must in any market. And it'southward even more than important when domicile supply is depression. If yous don't do this legwork ahead of time in a market like this, you lot could give a preapproved heir-apparent costless rein to swipe the home you want right out of your hands.

What Slim Pickings Mean for Sellers

If you're selling a home, low inventory means less competition! Yous can probably expect to see offer letters flooding your mailbox like Harry Potter's acceptance letters from Hogwarts—especially if your home is in a great location or has features that buyers want.

Even if your home isn't quite then appealing to buyers in a regular market, you stand a better gamble in the electric current real manor market place. Since your home volition be one of the (relatively) few listed on the market, you could have the upper hand when it comes to negotiations and the final sales price. Then enjoy possibly getting multiple offers, picking the best one, and moving at a pace that suits your timeline.

Simply if y'all're buying a new home after your current dwelling is sold, you probably won't be in the driver's seat anymore. Decide on plans for your adjacent home before you lot sell.

Existent Estate Trend #2: Dwelling house Prices Are All the same Rising

Side by side up: abode price trends. In the electric current real estate market, prices are going upward—just like groceries, gas and basically everything else. The national median home price increased to $363,700 by the end of 2021!⁴ That said, the rate at which they're increasing slowed down toward the terminate of the year.

From April to June of 2021, dwelling house prices rose virtually 23% higher than they were during the same fourth dimension in 2020.⁵ Simply abode prices were but sixteen% college from July to September of 2021 than July to September of 2020.⁶

Both of those real estate trends will likely keep in 2022: Prices will likely become up more slowly than they did in early 2021, but they will keep going upwardly.

Sellers, this should put a big smile on your face! And hang tight, buyers—we have some advice for you too.

What Higher Prices Mean for Buyers

If you're going to buy a home in this expensive marketplace, you lot absolutely accept to know how much business firm yous tin can really afford. Commit to staying within that budget no thing what—don't cavern to the pressure to purchase because you lot're tired of watching competitors pluck good homes off the market.

We know waiting on the right abode in your budget can get frustrating. But y'all'll be glad you did it when y'all have financial peace instead of a large, honking headache of a mortgage!

To feel confident about ownership a home this yr, follow these tips:

Limit your house payment to no more than 25% of your monthly take-habitation pay. This payment includes principal, interest, property taxes, homeowners insurance and, if your downward payment is lower than 20%, private mortgage insurance (PMI). Plus, don't forget to count homeowners association (HOA) fees in your budget.

Relieve at least 10–twenty% for a down payment. Nosotros recommend at least 10%, because anything less will drown you in actress interest and fees. Putting twenty% or more downwardly is even better because you tin avoid paying PMI—an extra fee added to your mortgage to protect your lender (not you) in case you don't make payments. Saving a big downwardly payment like this is possible! You only have to stay patient and focused. Who knows? You might fifty-fifty exist able to save for a five-figure down payment by this fourth dimension next year!

Choose a 15-year fixed-rate conventional mortgage. The everyman cost home loan is a 15-year stock-still-rate mortgage. Rip-offs similar the xxx-year mortgage, FHA, VA, USDA and adjustable-rate mortgages will charge y'all tens of thousands of dollars actress in involvement and fees and keep you in debt for decades. No cheers!

At present crunch the numbers with our gratuitous mortgage reckoner to figure out a monthly payment your budget can handle. And and so piece of work with an good amanuensis to find houses for sale within that budget.

For more help ownership a domicile in this crazy market, check out our costless Abode Buyers Guide. It has all the answers you need to buy a home with confidence.

What Higher Prices Mean for Sellers

A nice profit may exist on the horizon! And that'due south dandy news because y'all'll really want that extra money when buying your next home. To become the best offering for your home, work with an experienced agent who actually knows your local, current real estate market.

And be certain to expect for the correct offer. Some buyers may try to gut punch you with a low number. If you aren't in a bustle to move, wait for an offer that gives you the nigh profit. Call back, the less desperate person e'er has the upper mitt when negotiating.

Real Estate Trend #3: Mortgage Involvement Rates Are Still Super Low

The average mortgage interest rate (the fee lenders charge as a percentage of your loan amount) has been nice and low lately.

In fact, the boilerplate rate for a 15-yr stock-still-charge per unit mortgage dropped to two.2% in Jan 2021—the lowest it'due south been since Freddie Mac started reporting 30 years ago!⁷ Those rates hung out anywhere between ii.15% and ii.four% for the rest of the twelvemonth.⁸That said, they started rising again toward the end of 2021, so look for them to go upwardly slightly in 2022 too.

Economist geeks retrieve the Federal Reserve volition hike involvement rates upward to effectually iii.v% for 30-year stock-still-rate mortgages in 2022.⁹ By the fashion, that'south a big reason nosotros merely recommend 15-year mortgages: They tend to have lower rates than 30-year mortgages, and since they finish 15 years sooner, you'll pay less interest over fourth dimension. That'southward a one-two punch when it comes to saving money!

If you want to refinance or get a mortgage from a trustworthy lender who actually cares nigh helping you pay off your home fast, talk to our friends at Churchill Mortgage.

What Lower Rates Mean for Buyers

Certain, involvement rates are low right now—which tin can help with affordability. Merely don't let that pressure you lot into buying a business firm you aren't ready for. A super low involvement rate on a house you lot can't afford is still a bad deal.

So remember to stick to our advice on monthly payment limit, downward payment amount and mortgage type (see Existent Estate Trend #2) and you'll be in great shape!

What Lower Rates Mean for Sellers

If interest rates stay low, buyers will be more motivated to purchase your home sooner than later. But if involvement rates do showtime to increase, only plan for your house to exist on the market a little longer.

And if y'all don't plan on moving anytime soon, you might even so be able to take advantage of these super low interest rates and shorten your payment schedule by refinancing your mortgage.

Real Estate Trend #4: Online Real Estate Services Are Growing

No doubtfulness you lot've heard of real estate services like Zillow that let y'all browse or list homes for sale online. But did you know online services now offer to buy and sell your business firm for you?

Tertiary-Party Buyers

Here'southward how the new iBuying trend works: Yous tell companies like Opendoor about the house you want to sell. They buy it from y'all, pump some money into it to resell at a higher cost, and handle all the home processing stuff like inspections, repairs and home showings.

These companies promise yous less hassle and charge you pretty much the same as an amanuensis commission for selling costs—but information technology'due south not all rainbows and sunshine. Some of these companies include an additional service fee (icing on their cake), which may mean less turn a profit for you lot.

Worst of all, y'all don't get the benefit of working with a elevation-notch agent who actually knows the current real estate market in your area and could sell your dwelling house for more money.

Using a "Virtual" Amanuensis

Hybrid services like Redfin aim to reduce traditional agent commissions by treatment things online. This gives you fractional services that are similar to working with an agent but for a fraction of the price. Think of it as a middle ground between selling with an amanuensis and selling by yourself. Merely when selling a home, be wary of the middle basis. Your home is your biggest asset, and y'all get what you lot pay for!

Mobile or Online Closings

In related news, digital technology likewise makes it easier to handle buying and selling documents nigh. For example, many home transactions now use electronic signature apps and remote online notarization to streamline the process.¹⁰ In other words, yous could buy or sell a house this year without getting out of your car or ever changing out of your bathrobe and slippers.

Y'all can wait to encounter more of these trendy digital services in real estate in 2022. Just remember not to become swept up in every hot new trend: Use your brain, your budget and a great professional real estate agent to make sure you're getting the best deal on the right house for yous.

Real Estate Trend #5: Risky Buying Options Are More Accessible

Okay, let's cover another trending, "creative" ways to buy a home (beware!).

Hire-to-Own

If you're itching to buy a home but tin't quite afford it nonetheless, some sellers like Divvy offering a hire-to-own agreement. In this (bad) bargain, you agree to rent the abode for a while—anywhere from several months to several years—before becoming the possessor.

The "plus" side of rent-to-own is that you tin can get into a house fast, without waiting to save a down payment. (Simply you know how we feel about that.) Too, you don't have to qualify for a mortgage correct away.

The downside of hire-to-own is that it makes your rent more than expensive because some of your monthly payment volition go toward future homeownership. With rent prices increasing across the country, at present'due south not the time to pay even more!

And if you later determine you don't want to buy the house or something happens to break your contract (similar you don't get approved for the mortgage), you won't go all those extra payments dorsum. They will have been a waste! Plus, y'all may accept to handle repairs and maintenance yourself, even while renting. This pick leaves you in a very vulnerable place financially.

Bottom line: If y'all can't afford homeownership yet, don't buy one. Keep saving for that down payment and wait until your financial ducks are in a row. It'll happen sooner than y'all think if you're willing to work at it!

Downwardly Payment Loans

Another risky existent estate tendency to avoid is taking out a personal loan to fund a down payment. That's the same as buying a abode with 0% downward. You borrowed the entire toll of the business firm—except now you borrowed it from two different companies at two dissimilar interest rates (which ways twice as many headaches).

Purchasing a home with no money downwardly is never a expert idea. Remember, you lot desire a down payment that covers at least 10–20% of the home's value. Buying a firm with anything less will rob you of your other financial goals by having you lot pay as well much actress in interest and fees. Thankfully, not many mortgage lenders allow you to do this—plus, it tin can fifty-fifty disqualify you lot from getting the amount of mortgage you need.

What if I'chiliad Non Buying or Selling a Home This Year?

Yous may be thinking, All this is great, just I'chiliad not going anywhere anytime before long. Nosotros hear yous, and here are the real estate trends y'all should watch for at present:

i. Equity probably won't subtract through 2022.

With most electric current real estate markets at depression risk for a downturn, experts concur that home prices (and therefore abode values) will continue to rising—although they vary a little in how much they expect things to modify. Freddie Mac believes domicile prices will go along to rising in 2022—by seven%.¹¹ The National Association of Realtors^® (NAR) thinks price growth will be less than six%.¹²

This is still good news for you considering you'll probable brand a prissy profit if y'all do decide to sell. And if yous make up one's mind to stay put? More than equity ways a higher net worth! Continue to monitor how much your habitation is worth to brand certain your equity (what your dwelling house is worth minus how much you owe on it) is going upwardly.

two. A real estate market crash looks unlikely.

With all the dubiousness behind everything that happened in 2020 and with home prices growing a little slower in 2021, you might be wondering if the housing market could collapse. Well, it'south impossible to know for sure, but economists suggest a housing crash is unlikely.

Subsequently all, the super depression mortgage rates are motivating buyers to enter the market, which increases demand. But at that place'due south still a very low supply of home listings. This keeps abode ownership competitive and allows home price growth to soar.

three. Regardless of your neighborhood, buyers are interested.

Since home prices have experienced rapid growth over the by few years, some buyers may be less choosy. In fact, determined ones might exist willing to consider neighborhoods that don't have like shooting fish in a barrel access to highways or aren't close to a big metropolis. If you call up y'all alive in an unpopular neighborhood or believe your domicile isn't what buyers are looking for, remember once again. Now may be your perfect time to consider selling your house.

Take Command of the Real Estate Trends With a Top-Notch Agent

Whether you're selling or buying, you can take reward of the electric current real estate market trends past partnering with a professional existent estate agent.

Through our Endorsed Local Providers (ELP) program, our team will match you with acme-performing agents nosotros recommend in your area. These real estate ELPs have earned our seal of trust by really caring near your financial goals. (That's why we call them RamseyTrusted!)

Find your RamseyTrusted real estate agent today!

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