What does the housing market look like for the 2022-2023 buying season? If you are hoping to buy a home in the next year or so, no doubt you're looking for a read on the housing market to come.
In the last two years, the housing market has gone crazy. The pandemic and the ripple effect from it has had a sequence of enormous impacts on how we buy houses, how much homes are listed for, and the total demand for houses on the market. Other than the temporarily low-interest rate, the changes have not been favorable to home buyers. High prices, short inventory, and insane competition have led many to hold onto their down payment savings with a plan to wait out the storm.
Good news. The waters are calming, the storm is passing, and it's time for reasonable home buyers to peek their heads out and get a new read on the market. Today, we're here to offer a fresh perspective on the evolving housing market of 2022.
New Construction Homes Catch Up with the Short Housing Market
The first and perhaps most important change for home buyers across the country is new construction homes. Immediately after the pandemic, families and roommates realized that tight living conditions simply wouldn't do. An increased need for personal space and home offices led to the breaking up of blended households and a massive demand for individual housing - which could not be met.
Decades of under-building compared to household growth suddenly came to a head - influencing the buyer frenzy we saw in late 2020 through 2021.
However, developers have finally started catching up with condo units and new neighborhoods completing homes in time for the buyers of late 2022 - with more homes on the way and already selling units before buildings are complete. This has significantly eased the pressure of the short housing market. And as you know, when supply rises, the effects of overwhelming demand begin to ease as well.
Rising Interest Rates Stabilize Frenzied Bidding Wars
The pandemic economy dropped interest rates to record lows, which meant record low mortgage rates, as well. The big winners were the early home buyers and those clever homeowners who refinanced during this time. However, the sudden desire to snag those low-interest rates led to a flood of buyers on the market as soon as quarantine lifted - which resulted in vicious bidding wars, outpricing reasonable buyers and driving national home prices through the roof.
Since the beginning of 2022, interest rates have been increased rapidly by the FED to fight inflation - which has ended the opportunistic free-for-all on the part of competitive buyers.
With fewer bidding wars, buyers who were previously priced out are now able to find and secure homes on the market again - and at more normal prices.
Pricing on Homes is Once Again Reasonable
In the last two years, home prices went berserk. Bidding wars and short supply made one of the most intense "Sellers' Markets" in recent history. Sellers could ask nearly any price and buyers would compete for it. However, as supply increases and demand decreases, it's only natural for home prices and more recent listing prices to return to a level closer to each home's actual value.
While interest prices might be a little higher than a year ago, you may wind up paying less for the same amount of house now that home prices are returning to normal.
More Options and Better Prices for 2022-2023 Home Buyers
What does the home buying landscape look like for homebuyers in the Fall of 2022 and looking into 2023? To be frank, things are looking up.
Home availability is up, with more condos and suburban developments available on the market every month. Home prices are down, returning to normal after the post-pandemic price spikes. Competition is also down, so buyers are more likely to be able to close on the homes they love - and to take a reasonable amount of time for due diligence without the risk of being priced out before you're through. Interest rates are up, but are within a normal and reasonable level compared to pre-pandemic rates.
If you are considering buying a home in the next year, First Savings Mortgage is here to help. Reach out to one of our expert loan officers to get pre-qualified to have a better idea of how much home you can invest in and enter the housing market prepared to succeed.