Ready to buy your first home in 2022? The C.A.R.E. Team specializes in helping first-time home buyers like you find their dream property in Tyler TX and Sarasota FL areas.
You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!
Last year was one for the real estate history books. The pandemic helped usher in a buying frenzy that caused home prices to soar nationwide by a record 19.9% between August 2020 and August 2021.
However, there were signs in the fourth quarter that the red-hot housing market was beginning to simmer down. In the month of October, only 60.3% of sales involved a bidding war—down from a high of 74.5% in April.2 While this trend could be attributed to seasonality, it could also be a signal that the real estate run-up may have passed its peak.
So what’s ahead for the U.S. housing market in 2022? Here’s where industry experts predict the market is headed in the coming year.
MORTGAGE RATES WILL CREEP UP
Most economists expect to see mortgage rates gradually rise this year after hitting record lows in late 2020 and early 2021.3
Freddie Mac forecasts the 30-year fixed-rate mortgage will average 3.5% in 2022, up from around 3% in 2021.4
The Mortgage Bankers Association predicts that rates will tick up to 4% by the end of the year. "Mortgage lenders and borrowers should expect rising mortgage rates over the next year, as stronger economic growth pushes Treasury yields higher," said Mike Fratantoni, chief economist for the Mortgage Bankers Association at their 2001 Annual Convention & Expo in October.5
However, it’s important to keep in mind that even a 4% mortgage rate is low when compared to historical standards. According to industry trade blog The Mortgage Reports, “Between 1971 and December 2020, 30-year mortgage rates averaged 7.89%.”6
What does it mean for you? Low mortgage rates can reduce your monthly payment and make homeownership more affordable. Fortunately, there’s still time to lock in a historically-low rate. Whether you’re hoping to purchase a new home or refinance an existing mortgage, act soon before rates go up any further. We’d be happy to connect you with a trusted lending professional in our network.
THE MARKET WILL BECOME MORE BALANCED
In 2021, we experienced one of the most competitive real estate markets ever. Fears about the virus and a shift to remote work triggered a huge uptick in demand. At the same time, many existing homeowners delayed their plans to sell, and supply and labor shortages hindered new construction.
This led to an extreme market imbalance that benefitted sellers and frustrated buyers. According to George Ratiu, director of economic research at Realtor.com, “Prices and sellers reached for the moon [last] year. It looks like we are now about to move back to earth.”7
Data from Realtor.com released in November showed that listing price reductions had more than doubled since February 2021. And the average days on market (an indicator of how long it takes a home to sell) has been slowly creeping up since June.7
What’s causing this change in market dynamics? The real estate market typically slows down in the fall and winter. But economists also suspect a fundamental shift in supply and demand.
At the National Association of Realtors’ annual conference last November, the group’s chief economist, Lawrence Yun, told attendees that he expects increased supply to come from an uptick in new construction—which is already underway—and an end to the mortgage forbearance program. “With more housing inventory to hit the market, the intense multiple offers will start to ease,” he said.8
Demand is also predicted to wane slightly in the coming year. Rising mortgage rates and record-high prices have made homeownership unaffordable for a growing number of Americans. And in a recent Reuters poll, nearly 80% of property analysts said they expect housing affordability to worsen over the next several years.9
What does it mean for you? If you struggled to buy a home last year, there may be some relief on the horizon. Increased supply and softening demand could make it easier to finally secure the home of your dreams. If you’re a seller, it’s still a great time to cash out your big equity gains! And with more inventory on the market, you’ll have an easier time finding your next home. Reach out for a free consultation so we can discuss your specific needs and goals.
HOME PRICES LIKELY TO KEEP CLIMBING, BUT AT A SLOWER PACE
Nationally, home prices rose an estimated 16.8% in 2021.8 But the average rate of appreciation is expected to slow down in 2022.
Danielle Hale, chief economist at Realtor.com, told Yahoo! News, “Home asking prices have decelerated in the second half of 2021, with median listing price growth slipping from a peak of 17.2% in April to just 8.6% in October.”10
But experts disagree about how much more property values can continue to climb this year. Goldman Sachs predicts that home prices will rise by 13.5%, while Fannie Mae and Freddie Mac are forecasting a 7.9% and 7% rate of appreciation, respectively.2
However, not all analysts are as bullish. The National Association of Realtors predicts a 2.8% rate of appreciation for existing homes and 4.4% for new homes, while the Mortgage Bankers Association expects the average home price to decrease by 2.5% by the end of the year.10,2
According to Hale, “With prices near all-time highs and mortgage rates expected to rise, we expect this slowdown in prices to continue.”10
What does it mean for you? If you’re a buyer who has been waiting on the sidelines for home prices to drop, you may be out of luck. Even if home prices dip slightly (and most economists expect them to rise) any savings are likely to be offset by higher mortgage rates. The good news is that decreased competition means more choice and less likelihood of a bidding war. We can help you get the most for your money in today’s market.
RENTS WILL CONTINUE TO RISE
Along with home, gasoline, and used vehicle prices, rent prices rose dramatically last year. According to CoreLogic, in September, rents for single-family homes were up 10.2% nationally year over year.11 And economists at Realtor.com expect them to climb another 7.1% in 2022.12
“Homes are expensive now...but for most people, the comparison that is most important is how that cost of homeownership is going to compare to the cost of renting,” Zillow Senior Economist Jeff Tucker told CNBC in November.13
Tucker also pointed out that rent is less predictable than a mortgage—and more likely to go up along with inflation.13
Real assets, like real estate, are often used as a hedge against inflation. That’s because property values typically rise with inflation.14 And when a homeowner takes out a mortgage, they lock in a set housing payment for the next 30 years.
In contrast, renters are at the mercy of the market—and they don’t gain any of the benefits of homeownership, like tax deductions, equity, or appreciation.
George Ratiu of Realtor.com told CNBC that he advises buyers to consider their budget and time frame. If they plan to stay in the home for at least three to five years, he believes it often makes sense to buy.13
Fortunately, it’s shaping up to be a better year for buyers. “I think 2022 has the promise of providing less competition, a lot more homes to choose from, and, as a result, a lot more approachable prices,” Ratiu said.13
What does it mean for you? Both property and rent prices are expected to continue rising. But when you purchase a home with a fixed-rate mortgage, you can rest assured knowing that your monthly mortgage payment will never go up. Whether you’re a first-time homebuyer or a real estate investor, we can help you make the most of today’s real estate market.
WE’RE HERE TO GUIDE YOU
While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighborhood.
If you’re considering buying or selling a home in 2022, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year.
Fortune - https://fortune.com/2021/11/04/us-home-prices-real-estate-forecast-2022-outlook/
Fortune - https://fortune.com/2021/11/29/housing-market-real-estate-predictions-2022-forecast/
Freddie Mac - http://www.freddiemac.com/pmms/pmms30.html
Freddie Mac - https://freddiemac.gcs-web.com/news-releases/news-release-details/freddie-mac-strong-housing-market-will-continue-even-rates-and
Mortgage Bankers Association - https://www.mba.org/2021-press-releases/october/mba-annual-forecast-purchase-originations-to-increase-9-percent-to-record-173-trillion-in-2022
The Mortgage Reports - https://themortgagereports.com/61853/30-year-mortgage-rates-chart
Realtor.com - https://www.realtor.com/news/trends/has-housing-market-peaked/
National Association of Realtors - https://www.nar.realtor/newsroom/nars-yun-says-housing-market-doing-well-may-normalize-in-2022
Reuters - https://www.reuters.com/world/us/rise-us-house-prices-halve-next-year-affordability-worsen-2021-12-07/
Yahoo! News - https://www.yahoo.com/now/where-home-prices-headed-2022-130012748.html
CNBC - https://www.cnbc.com/2021/11/16/inflation-rent-for-single-family-homes-surged-10percent-in-september.html
Realtor.com - https://www.realtor.com/news/trends/what-to-expect-in-2022-housing-market/
CNBC - https://www.cnbc.com/2021/11/23/rising-inflation-hot-housing-market-what-you-need-to-know-about-buying-a-home.html
Money - https://money.com/inflation-2021-stocks-bitcoin-gold-reits-commodities/
Learn how to determine your current net worth and how an investment in real estate can help improve your bottom line.
Among its many impacts, COVID-19 has had a pronounced effect on the housing market. Low home inventory and high buyer demand have driven home prices to an all-time high.1 This has given an unexpected financial boost to many homeowners during a challenging time. However, for some renters, rising home prices are making dreams of homeownership feel further out of reach.
If you’re a homeowner, it’s important for you to understand how your home’s value contributes to your overall net worth. If you’re a renter, now is the time for you to figure out how homeownership fits into your short-term goals and your long-term financial future. An investment in real estate can help you grow your net worth, build wealth over time, and gain a foothold in the housing market to keep pace with rising prices.
Net worth is the net balance of your total assets minus your total liabilities. Or, basically, it is what you own minus what you owe.2
Assets include the cash you have on hand in your checking and savings accounts, investment account balances, salable items like jewelry or a car and, of course, your home and any other real estate you own.
Liabilities include your total debt obligations like car loans, credit card debt, the amount you owe on your mortgage, and student loans. In addition, liabilities would include any other payment obligations you have, like outstanding bills and taxes.
To calculate your net worth, you’ll want to add up all of your assets and all of your liabilities. Then subtract your total liabilities from your total assets. The balance represents your current net worth.
Total Assets – Total Liabilities = Net Worth
Keep in mind that your net worth is a snapshot of your financial position at a single point in time. Your assets and liabilities will fluctuate over both the short term and long term. For example, if you take out a loan to buy a car, you decrease your liability with each payment. Of course, the value of your asset (the car) will depreciate over time, as well. An asset that is invested in stocks or bonds can be even less predictable, as it’s subject to daily fluctuations in the market.
As a homeowner, you enjoy significant stability through your monthly real estate investment, also known as your home mortgage payment. While the actual value of your home can fluctuate depending on market conditions, your mortgage payment will decrease your liability each month. And unlike a vehicle purchase, the value of your home is likely to appreciate over time, which can help to grow your net worth. Right now, your asset may be worth significantly more than it was this time last year.3
If you’re a homeowner, contact us for an estimate of your home’s market value so that you can factor it into your net worth calculation. If you’re not a current homeowner, let’s talk about how homes in our area have appreciated over the last several years. That way, you can get an idea of how a home purchase could positively affect your net worth.
When you put your real estate dollars to work, it’s possible to grow your net worth, generate cash flow, and even fund your retirement. We can help you realize the possibilities and maximize the return on your investment.
Generally, property appreciates in one of two ways: either through changes to the overall market or through value-added modifications to the property itself.
This type of property appreciation is the one that many homeowners are enjoying right now. Buyer demand is at an all-time high due to a combination of record-low interest rates and limited housing inventory.4 At other times, rising home prices have been attributed to different factors. Certain local conditions—like a new commercial development, influx of jobs, or infrastructure project—can encourage rapid growth in a community or region and a corresponding rise in home values. Historically, home prices have been shown to experience an upward trend punctuated by intermittent booms and corrections.5
Well-planned and executed home improvements can also impact a home’s value and increase homeowner equity at the same time. The type of home improvement should be appropriate for the home and in tune with the desires of local buyers.
For example, a tasteful exterior remodel that is in keeping with the preferences of local home buyers is likely to add significant value to a home, while remodeling the home to look like the Taj Mahal or a favorite theme park attraction will not. A modern kitchen remodel tends to add value, while a kitchen remodel that is overly expensive or personalized may not provide an adequate return on investment.
You may be used to thinking of investments primarily in terms of stocks and bonds. However, the purchase of a real estate investment property offers the opportunity to increase your net worth both upon purchase and year after year through appreciation. In addition, rental payments can have a positive impact on your monthly income and cash flow. If you currently have significant equity in your home, let's talk about how you could put that equity to work by funding the purchase of an investment property.
A long-term rental property is one that is leased for an extended period and typically used as a primary residence by the renter. This type of real estate investment offers you the opportunity to generate consistent cash flow while building equity and appreciation.6
As an owner, you don’t usually have to worry about paying the utility bills or furnishing the property—both of which are typically covered by the tenant. Add to this the fact that traditional tenants translate into less time and effort spent on day-to-day property management, and long-term rentals are an attractive option for many investors.
Short-term rentals are often referred to as vacation rentals because they are primarily geared towards recreational travelers. And as more people start to feel comfortable traveling again, the short-term rental market is poised to become a more popular option than ever. In 2020 alone, in the thick of widespread travel bans, the short-term rental platform Airbnb’s market share of the hospitality industry reached as high as 41 percent.6
Investing in a short-term rental offers many benefits. If you purchase an investment property in a top tourist destination, you can expect steady demand from travelers while taking advantage of any non-rented periods to enjoy the home yourself. You can also adjust your rental price around peak demand to maximize your cash flow while building equity and long-term appreciation.
To reap these benefits, however, you’ll need to understand the local laws and regulations on short-term rentals. We can help you identify suitable markets with investment potential.
Ready to calculate your personal net worth? Contact us for an easy-to-use worksheet and to find out your home’s current value. And if you want to learn more about growing your net worth through real estate, we can schedule a free consultation to answer your questions and explore your options. Whether you’re hoping to maximize the value of your current home or invest in a new property, we’re here to help you achieve your real estate goals.
The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult the appropriate professionals for advice regarding your individual needs.
National Association of Realtors - https://www.nar.realtor/newsroom/housing-market-reaches-record-high-home-price-and-gains-in-march
Forbes - https://www.forbes.com/advisor/investing/what-is-net-worth/
The Washington Post - https://www.washingtonpost.com/business/on-small-business/your-net-worth-is-americas-secret-economic-weapon/2020/08/20/70df5b92-e2d4-11ea-82d8-5e55d47e90ca_story.html
Bloomberg - https://www.bloomberg.com/news/articles/2021-04-09/home-prices-soar-in-frenzied-u-s-market-drained-of-supply
Federal Reserve Economic Data - https://fred.stlouisfed.org/series/MSPUS
Propmodo - https://www.propmodo.com/what-the-growing-short-term-rental-market-means-for-multifamily-real-estate/
Imagine the first place you lived as a young adult. Now imagine trying to fit your life today into that space. Not pretty, right?
For most of us, our housing needs are cyclical.1 A newly independent adult can find freedom and flexibility in even a tiny apartment. That same space, to a growing family, would feel stifling. For empty nesters, a large home with several unused bedrooms can become impractical to heat and clean. It’s no surprise that life transitions often trigger a home purchase.
While your home-buying journey may not look like your neighbor’s or friend’s, broad trends can help you understand what to keep in mind as you house hunt. No one wants to regret their home purchase, and taking the time now to think about exactly what you need can save a lot of heartache later.
The Newly Married or Partnered Couple
The financial and legal commitment of marriage has provided a springboard to homeownership for centuries, though these days more couples are buying homes without exchanging rings. In the last few decades, changing demographics have shifted the median age of first marriage and buying a first home into the late 20s and early 30s, planting most newly married or partnered buyers firmly in the millennial generation.2,3 But no matter your age, there are some key factors that you should consider as you enter into your first home purchase together.
Affordability is Key
There’s no doubt about it—with high student loan debt and two recessions in the rearview mirror, many millennials feel that the deck is stacked against them when it comes to homeownership. And it’s not just millennials—Americans of all ages are facing both financial challenges and a tough housing market. But stepping onto the property ladder can be more doable than many realize, especially in today’s low mortgage rate environment.
While many buyers are holding out for their dream home, embracing the concept of a starter home can open a lot of doors.4 In fact, that’s the route that most first-time homebuyers take—the average home purchase for a 20-something is about 1,600 square feet. While the average size increases to around 1,900 square feet for buyers in their 30s, it’s not until buyers reach their 40s that the average size passes 2,000 square feet.5
Chosen carefully, a starter home can be a great investment as well as a launchpad for your life together. If you focus on buying a home you can afford now with strong potential for appreciation, you can build equity alongside your savings, positioning you to trade up to a larger home in the future if your needs change.6
Taking Advantage of Low Mortgage Rates
Mortgage rates are historically low, making now the perfect time to purchase your first home together. A lower interest rate can save you tens of thousands of dollars over the life of your loan, which can significantly increase the quality of home you can get for your money.
But what if both halves of a couple don’t have good credit? You may still have options. First, boosting a credit score can be easier than you think—simply paying your credit cards down below 30% of your limit can go a long way. But if that’s not enough to boost your score, you might consider taking out the mortgage in only the better-scoring partner’s name. The downside is that applying for a mortgage with only one income will reduce your qualification amount. And if you take that route, make sure you understand the legal and financial implications for both parties should the relationship end.
Commute and Lifestyle Considerations
Whether you’ve lived in a rental together for years or are sharing a home for the first time, you know that living together involves some compromises. But there are certain home features that can make life easier in the future if you identify them now. The number of bathrooms, availability of closet space, and even things like kitchen layout can make a big difference in your day-to-day life and relationship.
Your home’s location will also have a significant impact on your quality of life, so consider it carefully. What will commuting look like for each of you? And if you have different interests or hobbies—say, museums vs. hiking—you’ll need to find a community that meets both your needs. Need some help identifying the ideal location that fits within your budget? We can match you with some great neighborhoods that offer the perfect mix of amenities and affordability.
The Growing Family
Having kids changes things—fast. With a couple of rowdy preteens and maybe some pets in the mix, that 1,600 square foot home that felt palatial to two adults suddenly becomes a lot more cramped. Whether you’ve just had your first child or are getting to the point where your kids can’t comfortably share a bedroom any longer, there’s plenty to consider when you’re ready to size up to a home that will fit your growing family.
The Importance of School Districts
For many parents, the desire to give their kids the best education—especially once they are in middle and high school— surpasses even their desire for more breathing room. In fact, 53% of buyers with children under 18 say that school districts are a major factor in their home buying decisions.7 Of course, better funded (and often higher ranking) schools correspond to higher home prices. However, when push comes to shove, many buyers with kids prefer to sacrifice a bit of space to find a home in their desired location.
But when you’re moving to a new community, it can be tough to figure out what the local schools are actually like—and online ratings don't tell the whole story. That’s why talking to a local real estate agent can be a gamechanger. We don’t just work in this community; we know it inside and out.
For many families, living space is a key priority. Once you have teenagers who want space to hang out with their friends, a finished basement or a rec room can be a huge bonus (and can help you protect some quieter living space for yourself).
A good layout can also make family life a lot easier. For example, an open plan is invaluable if you want to cook dinner while keeping an eye on your young kids playing in the living room. And if you think that you might expand your family further in the future, be sure that the home you purchase has enough bedrooms and bathrooms to accommodate that comfortably.
Try to think about how each room will fit into your day-to-day. Are you anticipating keeping the house stocked to feed hungry teenagers? A pantry might rise to the top of the list. Dreading the loads of laundry that come with both infants and older kids (especially if they play sports)? The task can be much more bearable in a well-designed laundry room. Imagine a typical day or week of chores in the house to identify which features will have the biggest impact.
Chances are, you won’t find every nice-to-have in one home, which is why identifying the must-haves can be such a boon to the decision-making process. We can help you assess your options and give you a sense of what is realistic within your budget.
The Empty Nesters
When we talk about empty nesters, we usually think about downsizing. With kids out of the house, extra bedrooms and living space can quickly become more trouble than they’re worth. While the average buyer under 55 trades up to a larger home, buyers over 55 are more likely to purchase a smaller or similarly sized but less expensive home. Even in the highest age groups, the majority of home purchases fall in the single-family category. According to research by the National Association of Realtors, by the time buyers reach their 70s, the median home size drops to 1,750 square feet.5 But there’s plenty for empty nesters to think about besides square footage.
Maintenance and Livability
What factors are driving your decision to move? Identifying those early in the process can help you narrow down your search. For example, do you want to have space for a garden, or would you prefer to avoid dealing with lawn care altogether? What about home maintenance? In many cases, a newer home will require less maintenance than an older one and a smaller one will take less time to clean. You may also want to consider townhomes, condos, or other living situations that don’t require quite as much upkeep.
Many empty nesters have retired or are nearing retirement age. This could be your chance to finally pursue hobbies and passions that were just too hard to squeeze into a 9-5. If you’re ready to move, consider how you’d like to spend your days and seek out a home that will help make that dream a reality. For some, that might mean living near a golf course or a beach. For others, being able to walk downtown for a nice dinner out is the priority. And with more time to spend as you wish, proximity to a supportive community of friends and family is priceless.
Ability to Age in Place
Let’s face it—we can’t escape aging. If you’re looking for a home to retire in, accessibility should be front-of-mind.8 This may mean a single-story home or simply having adequate spaces on the first floor to rearrange as needed. While buying a home that you plan to renovate from the start is a viable option, being forced into renovations (because of the realities of aging) a few years down the road could seriously dig into your nest egg. Location matters, too—if your family will be providing support, are they close by? Can you easily reach necessities like grocery stores and healthcare? While it’s tempting to put it out of our minds, a few careful considerations now can make staying in your home long-term much more feasible.
Finding the Right Home for Right Now
One thing is for sure—life never stands still. And your housing needs won’t, either. In the United States, the median duration of homeownership hovers around 13 years.9 That means many of us will cycle through a few very different homes as we move through different life stages. At each milestone, a careful assessment of your housing options will ensure that you are well-positioned to embrace all the changes to come.
Whatever stage you’re embarking on next, we’re here to help. Our insight into local neighborhoods, prices, and housing stock will help you hone in on exactly where you want to live and what kind of home is right for you. We’ve worked with home buyers in every stage of life, so we know exactly what questions you need to ask. Buying a home—whether it’s your first or your fifth—is a big decision, but we’re here to support you every step of the way.
We support the Fair Housing Act and equal opportunity housing.
Freddie Mac - http://www.freddiemac.com/blog/homeownership/20190104_homebuying_lifecycle.page
PRB - https://www.prb.org/usdata/indicator/marriage-age-women/snapshot/
Experian - https://www.experian.com/blogs/ask-experian/research/average-age-to-buy-a-house/#:~:text=Buying%20a%20first%20home%20will,by%20real%20estate%20marketplace%20Zillow
Nerdwallet - https://www.nerdwallet.com/article/mortgages/starter-home-forever-home
NAR 2020 Home Buyers and Sellers Generational Trends Report - https://cdn.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf
Investopedia - https://www.investopedia.com/personal-finance/what-look-starter-home/
NAR 2019 Moving With Kids https://www.nar.realtor/research-and-statistics/research-reports/moving-with-kids
Kaiser Health News - https://khn.org/news/baby-boomers-aging-aging-in-place-retrofit-homes/
National Association of Realtors - https://www.nar.realtor/blogs/economists-outlook/how-long-do-homeowners-stay-in-their-homes#:~:text=As%20of%202018%2C%20the%20median,varies%20from%20area%20to%20area
Just a quick “Hi!” to my long-time followers and a cheery “Welcome!” to all my new visitors! You've made it to my tiny home on the internet. I really think you're gonna love it here. So you know, here’s what’s you can expect up ahead: • links to the most recent listings in your zip, • advice for sellers who want top dollar, • guidance for first-time and veteran buyers • market trends, stats, and insights • home design and org tips that actually work, • local happenings not to miss, and more! Consider this your one-stop shop for all your real estate FAQs. I hope you’ll stay a while! Real quick, while you’re settling in, let me introduce myself: • My favorite thing about what I do is helping people achieve their dreams. 💭 • One thing most people don’t know about me is that I have food allergies. 🙅 • In a talent show, you’d find me wiggling my ears 👂 • And last but not least, I have an entire zoo of fur-babies - just missing an elephant! 🐘
👋🏻 Want more? Follow us everywhere! 👇🏻 YouTube: https://buff.ly/34ykdrO Google: https://buff.ly/34zcVnH FL Instagram: https://buff.ly/3sadbBH TX Instagram: https://buff.ly/3L8LLoa FL Facebook: https://buff.ly/3AWrcqH TX Facebook: https://buff.ly/3ASM3ec LinkedIN: https://buff.ly/3rooyXr
See you around! 🥰
The months of quarantine and shutdowns across the US gave people plenty of time to think about what they’re looking for in their next home—and now that restrictions have been lifted in many parts of the country, a large percentage of those people are reentering the market, looking for homes, and getting ready to move...