It has been a wild ride for us agents working with clients looking to buy in 2022. The year began with a frenzy of people looking to buy after the FED announced its plans to increase rates throughout 2022. The selling season started early and as interest rates increased, demand decreased a bit—but we’ve remained in a seller’s market to this point in the year. People have been discussing a “crash” of the housing market, but what we are seeing is exactly what was expected: a cooling of the market, as interest rates increase.
So, while prices are no longer soaring, demand has decreased, inventory is starting to come back and sellers are competing for buyers more than in the last few years. Sounds like a great time to buy—except that the increase in interest rates has stretched affordability to the limit. Lots of discussion about timing the market; the problem is that it is hard to get everything you want when buying a home, because it is so rare to get a low price and low rate on a home you love. It is a lot like the saying, “Fast, cheap, or good; pick two.” The same goes for the real estate market; you can get a good price or a good rate, but rarely do they ever coincide. The last couple of years people got great houses, at a great rate, but they were paying a premium or perhaps even an “inflated price.” Right now, buyers can negotiate lower prices than even a few months ago, so they’re getting great houses at a great price. But unfortunately, the interest rate is higher, perhaps even “inflated.” Which brings up the million-dollar question: Is now a good time to buy?
The answer is… it depends. There are all kinds of personal factors that come into play, but right now there seem to be a couple of competing theories about what is going to play out in the housing market over the next few months or years. Some think that interest rates will continue to rise to control inflation. This will decrease demand further, and home prices will have to drop to attract buyers. On the other hand, if inflation has slowed enough and rates are able to come down, demand would pick up and buyers would be competing against each other again. The point is that there is always a reason to buy and there is always a reason to wait. Having said that, right now it can be hard to determine what is going to happen in the housing market and economy in general, so it is always best to consider a multitude of factors and scenarios and work through how they all might impact your decision to buy a home in today’s economic environment. I don’t have a crystal ball and cannot predict the future, so I can’t be certain of how any of this will play out. Sorry.