This question is one of the most common questions we see from consumers, investors, real estate agents, and many others with interest in the real estate market.  The answer is ‘yes’.  But it also depends on your specific situation, what’s important to you, and where you are financially.

The reason the question “is it a good time to buy a house” comes up frequently today is because interest rates have risen substantially year over year, making the monthly payment rise for many people considering a home purchase.  With these higher payments, many are wondering if it’s a bad time to buy a home, but it’s important to remember that with increasing rates has come a softening market – meaning buyer’s today are seeing both lower median home prices and reduced competition, allowing for seller concessions that weren’t widely available during the market craze of 2020-2021.  So while payments might be higher today, total price tags may also be lower, allowing buyers to keep more money in the bank at closing time.

Median home prices in the US have come down from their 2021 highs

The other consideration many people have when asking ‘is it a good time to buy a house’ is what will happen with home values in the future.  The real estate crash of 2010 is still fresh in a lot of minds, but it’s important to look at the economics of today’s market and compare them to the crash to see what’s likely to happen in the coming months.

One of the important considerations is one of the foundational aspects of economics and pricing – supply & demand.  If you consider the US population has continued to increase and believe that means more people will require housing, the next place to look for a clue on where home values will go is to housing supply.

Housing inventory is far below the 2007 market peak

In the image below you can see that housing supply is far below the supply of homes that was on the market in 2007 preceding the crash in home values.  While low inventory isn’t a guarantee of home price growth, in terms of supply and demand, the lack of inventory for a growing population should provide some support for home values and continued appreciation, even if that appreciation is slower than the abnormally high appreciation rates home owners saw in 2020 and 2021.  It’s also important to note that real estate is very local, and some markets have more inventory than others, along with varying populations, so examining these numbers in your local market is important!

So interest rates are up, but it appears home values have some support.  Interest rates also ebb and flow, so while you should never buy a home based on the hope that your payment will eventually get cheaper, that possibility does exist!  If rates dip, refinance possibilities may exist for home owners to reduce their monthly mortgage payment, but this is no guarantee – it would just be a cherry on top for today’s would be home buyers.  As you can see below, home prices have historically climbed on a consistent basis outside of the great recession over a decade ago, and for that reason home ownership has been a key metric in helping Americans establish wealth and grow their net worth.  For many, the alternative (renting) doesn’t offer that same level of financial security.

Home values have climbed since 1975

So while we’re a mortgage company and home ownership is in our interest (pun intended), a look at the data supports home ownership being a great idea for those who can afford their monthly payment, and those who have the financial stability to consistently make a mortgage payment.  The lack of inventory nationwide is good support for home values, and rising rates have diminished some demand, giving buyers more power and control in the purchase process than they’ve had in recent years.

The post Is It a Good Time to Buy a House? appeared first on Mason-McDuffie Mortgage Corporation.

With the final quarter of 2021 under way, we expect to see a lot of forecasts and announcements around changes as we head into another new year.  Over the next month, 2022 loan limits will be announced, lenders will begin to make a final push to finalize their loans needing to close before year’s end, and planning and speculation for the new year will begin.  Much of that speculation and forecasting is already underway.

One forecast that is consistent across many economic experts is one showing home appreciation forecast to increase through 2022.  With 2021 being a tremendous year for appreciation and supply & demand metrics out of whack and heavily favoring sellers in most markets, it’s no surprise appreciation is expected to continue.  With many markets in 2021 seeing nearly 20% appreciation rates, 2022 is expected to be another big year, with forecasts coming in from Goldman Sachs with an expectation of 16% appreciation.  With the median US home price around $300,000, that would mean purchasing a home at $300k today would have a home worth $348,000 at the end of 2022!

Not all forecasts are quite as optimistic though, with Zillow’s forecast model predicting a jump of 11%, and Corelogic much lower at 2.2%.  It should be noted though, that Corelogic has pretty consistently missed the market on home value forecasts, actually forecasting a drop in home values for 2021.  A few other economic hubs have forecasts in between Zillow & Corelogic’s guesses.  Bottom line, though, is that just about everyone in economic circles believes home prices will continue to rise in the new year.

What Does This Mean For You?

If you’re a homeowner, it means you’ll enjoy a nice bump to your home equity position and have some options if you need to access home equity for things like renovations or to pay off other outstanding debt.  If you’ve recently purchased and have PMI, it may also mean you’ll have an opportunity to reduce your PMI or get rid of it altogether should your home appreciate enough!

If you’re a potential home buyer, it means that acting sooner rather than later is in your best interest.  Homes will likely be more expensive as the months go on, and with supply chain troubles still occurring, odds are that there will not be nearly enough supply of new homes coming to meet current demand.  This could mean another year of limited inventory and competitive situations, but the upside is that once you own, the appreciation begins to work for you, and no longer against you.  With rates on mortgage loans also expected to rise in 2022 (the MBA has forecast that rates will approach 4% in the new year), making a purchase with rates still near historic lows and with values where they sit currently, savings could be substantial for those who buy early in the year rather than waiting.

How We Can Help You

At MasonMac, we’ve invested in modern tools and have access to data nationwide, so we can look at data down to the zip code to provide you with solid advice and show you what home values are likely to do in a specific area.  We also have no- and low-down payment mortgage options so that even while home values climb, we can offer loan products that don’t require breaking the bank to get into a new home.  With tools like our “cost of waiting”, “buying power”, “rent V buy”, and “bid over ask” platforms, we can show you how to be a savvy buyer and structure a great offer to increase your odds of getting your home in a competitive situation.  And with full underwriting approval available before you find a home, you can rest assured you’re in the best possible position to become a home owner.

How else can we help you?  Contact us today with any questions, or if you’d like to see market data for your area (or any area in the US!) or be connected with a loan officer that can guide you down the path to home ownership.  In 2022, owning a home is forecast to be solid ground financially, and will be another year of proving that your financial security begins at home!

The post Homeowners Should Expect Appreciation in 2022 appeared first on Mason-McDuffie Mortgage Corporation.