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It's hardly a secret the housing market has been tough to navigate this year. Buyer demand has been through the roof, fueled by competitive mortgage rates. And limited housing inventory has given sellers the clear upper hand when it comes to commanding high prices for the properties they're seeking to unload.
In the third quarter of 2021, U.S. home prices rose 18.5% from the same time a year ago,
according to the Federal Housing Finance Agency's House Price Index. Meanwhile, home prices were up 4.2% in the third quarter compared to the previous quarter. To be clear, that uptick in home prices applies to all 50 states.
Should you attempt to buy a home now?
If you're in the market for a new home, you might face your share of challenges as a buyer. Home prices are so inflated that many buyers are finding it difficult to get into neighborhoods that would normally be within their financial reach. With housing inventory still being extremely limited, buyers are also struggling to find homes that meet their needs, even if they're able to pay a premium for one.
If you decide to put off your home buying plans until 2022, you may find that it's easier to buy a home in six to nine months. The reason? That gives the market more time to enjoy an increase in inventory.
Granted, there's no guarantee more homes will hit the market in 2022, but a big reason sellers have held off thus far has boiled down to economic uncertainty fueled by the pandemic. At this point, the COVID-19 outbreak is still very much with us. But on the plus side, the economy has improved tremendously since this time last year.
Currently, the unemployment rate is much closer to where it sat before the pandemic, and the likelihood of getting laid off is lower in many industries. As a result, sellers may be more willing to take the plunge and list their homes in the coming year, especially if the economy continues on its recent path.
If more homes do hit the market in mid-2022, buyers will get more bargaining power. That means bidding wars may become less frequent and home prices could come down.
How to gear up to buy a home
In today's market (and, most likely, next year's market), you'll need to present yourself as a competitive buyer if you're eager to buy a home. Make sure to:
- Save up a decent down payment, keeping in mind that putting down 20% means avoiding private mortgage insurance on a conventional loan.
- Have a strong credit score to qualify for a great rate from a mortgage lender.
- Get pre-approved for a mortgage so when you're ready to make an offer on a home, you come across as a serious buyer whose finances have already been looked at.
Home prices are higher than they've been in a long time, and they may stay that way for a while. It's possible to buy a home despite the tough market, but the more prepared you are, the greater your chances of being successful.
A historic opportunity to potentially save thousands on your mortgage
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
Our expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!).
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