Alex Wade Finance
Property Buying Tips in 2022
The property market is in a state of flux. In the coming years, prices are likely to increase year-over-year at a slower pace than in 2021, with Millennials expected to be more savvy negotiators than their predecessors. As a result, it’s essential to study the market carefully, including neighborhood demographics. Home prices will rise year-over-year at a slower rate than the previous years.Alex Wade
Home prices are expected to increase year-over-year at a slower pace than in 2021
The current pace of home price growth is not sustainable over the long run. Zillow, an online home sale marketing company, projects home prices will increase at a slower rate of 11 percent in 2022, compared with 19.9 percent in 2021. At the same time, the number of existing home sales is expected to decrease to 5.9 million, down from 6.35 million last year.
While slowing home sales will discourage some buyers, active buyers won’t have to worry about competing with each other in bidding wars or lowering their offers to get a seller to accept their offer. While home prices will likely rise at a slower pace next year, this doesn’t mean sellers will lose out. In fact, home prices will continue to rise in most markets.
Millennials will be better at negotiating
Millennials are notorious for making rash decisions to afford homes. For example, one in five would buy a home sight unseen, or opt to purchase a fixer-upper that needs significant repairs. Moreover, Millennials are accustomed to making offers that are higher than the original asking price. That makes the housing market in 2022 one of the most competitive and lucrative in U.S. history. The historically low interest rates have made it ripe for a boom. Consequently, the price of houses will rise by an average of 14%, compared to only 1% increase before the 2008 crash.
Millennials expect to live in their homes for 12 to 15 years, while boomers and the Silent Generation will spend at least 20 years in a home. The average home-ownership duration of Boomers and millennials was 12 years in the last report. Millennials are also more willing to take risks as they plan to move out in a few years, and nearly one-third of them will live in their next home for less than five years. Financial experts say that home values need to appreciate in order to cover closing costs.
Location is key
With the low inventory of homes, the most desirable properties will likely sell quickly. Most homes spent just 47 days on the market at the end of 2021, 10 fewer days than last year. This trend is expected to continue into 2022, making it essential to find a location with the highest demand. That means you may have to compromise on some of your wants. For example, you may have to settle for a lower-priced home in the best neighborhood, and then upgrade over time.
Despite the hot real estate market, the housing market in 2021 was an incredible ride. Rising interest rates and international investor competition are not the only obstacles facing homebuyers in the second half of 2022. In fact, it was even possible to find a home that sold for more than its asking price! However, the market has cooled off since then, and buyers are now taking the time to consider the risks associated with purchasing a home in a hot market. If you’re looking for a property in the future, you should learn from the mistakes of past buyers.
Working with a real estate agent is key
A good real estate agent knows the neighborhood, the price range, and the market. They can negotiate with the seller on your behalf to get the best possible price. In addition, they should have the confidence to push through difficult negotiations. Sometimes, an agent needs to submit several offers on a single property, so it is important to know exactly what they are looking for before making an offer. It also helps to have a thick skin, as not all real estate agents are accustomed to working with investors.
An excellent real estate agent should be well-versed in the state regulations and purchase contracts. They should also be familiar with the contract that you’ll sign, as well as the seller’s disclosure forms. These agents can also help you navigate the various legalities and pitfalls that could arise during the buying and selling process. And they should also be able to vet a lender for you.
Preapproval is key
A preapproval letter can be a vital component of the home buying process, especially in the current market, when homes are selling quickly and there is intense competition between buyers. In a competitive market, a preapproval letter is a great way to show potential sellers that you have the financial means to buy the home of your dreams. In addition to saving you time and money, a preapproval letter guarantees the home buyer the loan for 60 to 130 days.
The process of getting preapproved for a mortgage is free and does not obligate the buyer to a lender. The Government of Canada provides comprehensive information on the process. Once preapproved, a mortgage pre-approval letter allows buyers to see only homes that they can afford. Buying a home with a pre-approval letter can also help prevent overbidding situations. Although a mortgage pre-approval letter is helpful, you must be sure to use it wisely.