After a brutal couple of years for both home buyers and sellers that saw many give up in frustration, 2022 appears to be the year to deliver some good news for those still on the hunt. It could possibly be a good time for those who are ready to give it another go.
If you’re looking to buy a house, here are five reasons why the year 2022 could be a good time to buy a house.
Increase in the number of homes for sale
A perennial shortage of desirable homes for sale has been one of the biggest frustrations for home buyers. According to various reports and research, prospective sellers were holding off listing their properties for the entirety of 2020 and 2021 due to the uncertainty around COVID-19. A surge in buyer demand driven by historically low interest rates on home loan added to their hesitancy. Increasing numbers of millennials and baby boom buyers have flooded the markets owing to the prominence of remote working.
Many developments that were under construction have been able to fast-track their way to completion during the past two years. Consequently, more and more developers will begin listing ready to move in properties which is a major boost to all the buyers. Q4 of 2021 and Q1 & Q2 of 2022 saw new construction projects to add to the number of homes for sale.
Chances of price cuts on older listings
As the festive season is about to begin, it is traditionally the time when majority of the people look for make big purchases – such as to buy a house – as the time is considered to be auspicious. Home buyers can utilize this opportunity to buy a house by exploring already listed properties that may be running a few offers and discounts during the festive season. There are usually great offers during this time, and listings that have been sitting on the market for months generally start to see some price cuts.
COVID-19 derailed the macroeconomics in 2020, but we appear to be heading back to more normalcy since the second half of 2021. Research showed that a growing share of listed homes are being offered at a discounted price with multiple payment schemes at this point, making it a good time to buy a house.
If the number of properties on the market keeps on growing as expected, price adjustments could possibly create more opportunities for home buyers. Check out some listings on Address India’s properties section.
Slower price appreciation
After half a decade of skyrocketing housing prices, the pace at which they are growing has slowed down considerably. The slowdown is notable given that the purchasing power of public took a major hit during the COVID times. As with many other sectors, real estate is experiencing a slow recovery. For home buyers, this could possibly a good time to invest as there seems to be something of a breather right now.
Many experts have predicted that home prices nationwide will increase at an average annual rate of about 5-6% through 2025, substantially below the current annual appreciation rate of about 11%.
Interest rates still within reach
Low interest rates boost your buying power. Naturally, that makes it easier for you to afford a home. When price appreciation is slowing, lower rates of interest are rather attractive. While the interest rates remained near historic lows, the downward pressure that has kept them at low is gradually showing signs of easing.
1% drop in interest rate saves you approximately 15% on interest payments. Inversely, 1% rise in interest rates would increase your monthly mortgage payment by the same amount. The higher payment may not add up as much on smaller loans, but it can add up quickly on bigger loans.
For about 2 years, interest rates on 30-year, fixed-rate home loan have hovered around 6.7-6.9%. Currently, the rate of interest is around the 7.5% mark. You can check those out here. Rates were much closer to 9% as recently as 2019, and they have consistently fluctuated between 12% and 13% for much of the 1990s.
Buy a house to reduce your tax liability
While a home is meant to live out your lives and makes memories, it is also a great instrument for investment. Moreover, it also comes with tax benefits. A house buyer may want to take advantage during this tax window and possibly close down on the financial year with lesser tax liability. You might find sellers and developers looking to make deals so they can close before the end of the festive season during Q3 and Q4 of 2022. Look for properties listed that offer incentives to close before the end of the 2022.
Individual owners and businesses alike may be offering festival season and end-of-year deals in sales on big purchase items such as appliances and furniture. This could help cut move-in costs for a home buyer, if timed right.
Although 2022 could be the year that provides opportunities for home buyers, the best time to buy a house is when it feels right for YOU to buy!