So many buyers, not enough houses. This has been the issue since 2020. From the very beginning of the pandemic when so many people took their houses off the market due to health concerns, to now rent rising at an exponential rate and so many renters wanting to buy their first home, we are in quite the home shortage crisis. Keep reading on to get an outlook on the housing market for 2022 and find out what you need to know if you plan on purchasing a home this year.
HOME PRICES ARE SURGING
Here in Florida, we have seen the biggest rent increases in the country, and housing prices are no different. Real estate experts are now saying that these housing price increases are going to continue to go up in 2022. They will be similar trends to the ones that we saw in 2020 and 2021. With that being said, interest rates will also increase this year. In the past two years, we saw record low interest rates as low as 2.5%. Although this is a disadvantage, this could possibly offset the housing shortage. If rates go up, less people will buy homes in hopes that it will go down again and there will be less competition in the market.
And even though we are all crossing our fingers that it happens, home prices will not drop. Buyers having to deal with bidding wars on homes will continue to happen. Between the large demand and still low interest rates, the housing market is still in the seller’s favor (in other words, if you are thinking about selling your home, there is no better time to do so.)
YOUNG BUYERS WILL BE AT A DISADVANTAGE
Over half of today’s millennials are first time home buyers and make up the majority of homebuyers today. Why are they at a disadvantage? Well let’s break it down. Millennials today are between the ages of 25-40 years and the current average home price in Central Florida falls roughly at $310,000-330,000. Whereas for example the baby boomers (currently aged about 57-75 years) at the same age was about $100,000. Now although with inflation, we make more than they did back in the day, the income to housing prices ratio was not as drastic as it is today. House affordability is becoming a growing concern and will continue to be in 2022.
Knowing all this important information, if you are planning to buy a home, do your research first. At the end of the day, if your absolute goal is to purchase a home, you will make it happen. It isn’t impossible, it just may take a little bit longer, and there are assistance programs available. Plus, even rent is going up, so why not get into a home that you can call your own and build equity on? Now just remember to stick to your budget (don’t get overly competitive with the bidding wars), get a real estate agent that you can trust (we have amazing and experienced agents here at Premium Properties) and get ready to move into your new home!