Is Buying a Home in 2022 Still a Good Investment?


Many buyers and investors have been frustrated about how the housing market has performed over the last few years. While demand for homeownership continues to flourish, affordability remains a big struggle for those looking to make a deal.

But despite hardships, the fact remains that market conditions still make it an optimal time to buy a new home. Buying a home is a great long-term investment and with the way markets are headed, the housing boom isn’t expected to slow down anytime soon.

Homes are continuing to appreciate and though mortgage rates are rising, they remain near historic lows. Rising inflation and rising rent prices are major considerations you want to factor into your home buying decision. They say once your rent amount exceeds the recommended 30% rule, which is that your rent and utility costs should not exceed 30% of your gross monthly income1 , you should strongly reconsider your options. Most landlords increase rent prices every single year, whereas if you have a 30-year fixed mortgage rate, you know what to expect every year with regards to your housing expense. Another thought, why not build equity, rather than pay your landlords mortgage every month?

Whatever your reasoning, whether it be low rates, long-term appreciation, or building wealth through equity, don’t give up on your home buying dreams and pursuits in 2022.
Homeownership can be your reality today! Here are just a few of reasons why buying a home in 2022 is still a good investment.


No Reason to Reel Over Rising Rates

In a recent announcement, the Federal Reserve has indicated the first of several rate hikes are expected to begin as early as March of 2022.2 We just witnessed this happen on March 16th 2022. The central bank cut interest rates as a response to the ongoing COVID-19 pandemic to help stimulate the economy. Now that conditions are improving, officials feel it’s time to raise rates again.

But factoring in higher rates, housing conditions still make it an optimal time to buy real estate. Taking a step back and looking at the big picture, interest rates have been at and will continue to remain (for the foreseeable future) near historic lows even with incremental rate hikes.

The 1970s-80s, interest rates ranged from 12.9%-18.45%.3 Even more recently, rates in the 2000’s hit a peak of 8.52%.3 Compare that to today’s rates, it’s apparent that credit continues to remain extremely cheap.

Additionally, rate hikes help most borrowers two fold. First, higher rates could help keep home prices from spinning too far ahead of affordability. Second, rising rates could create fallout by making some potential buyers think twice about buying (don’t be this borrower). This would shrink the pool of prospective buyers and reduce competition.


Improving Inventory is Imminent and Incoming

For the last couple of years, analysts have been citing a lack of inventory as one of the big culprits for increasing home prices across the U.S. While inventory remains low now, new data suggests conditions are slowly improving. New data signals many positive factors that will make buying easier, including improving
inventory.

Recent metrics show housing starts were up 15.6% in 2021 from 2020.4 This is just the tip of the spear as supply chain issues begin to improve and price of materials decreases as the economy continues to recover and expand.

Furthermore, buying a home is a savvy tactic to hedge against growing inflation. Inflation and housing are not mutually exclusive, but their trends tend to head in similar directions in response to macroeconomic conditions such as wage growth and employment.


Real Estate Metrics Show Continued Growth

While home prices may show signs of cooling in some areas, overall market trends show current owners continue to see their homes appreciating at a rapid rate.

Recently, the estimated median price for single-family homes and condominiums exceeded $300,000, which is a first for the industry. Measuring the average appreciation rate for the largest metro areas in the U.S. near the year-end of 2021, owners saw property values increase by approximately 9.4%.

Price appreciation has also led to the Federal Housing Finance Agency (FHFA) to increase the base conforming loan limits for 2022, making it easier for borrowers to qualify for traditional financing without resorting to more expensive jumbo mortgage programs.

Overall, this is good news for new buyers looking to buy a home and get in on the ground level
now, riding the wave that this housing boom has to offer.


Lenders Shifting Focus to New Home Buyers

As interest rates start to climb, some homeowners are beginning to become disincentivized to refinance their existing home mortgage loans. As a result of lower refinance volume, mortgage providers are shifting their focus to new home buyers and purchase activity. In general, this is good news if you are looking to buy a new home since lenders will be competing against one another to offer the best repayment options and pricing.

If you are looking for a new mortgage partner, it’s important to find a mortgage company that not only provides competitive rates, but also provide its clients with tools and strategies for success in this highly competitive seller’s market.

Many aspiring buyers are currently frustrated because their offers are being beaten by stronger offers.

PRIMATA Mortgage’s clients are having great success buying homes in this seller’s market because of the various options PRIMATA Mortgage provides its clients, allowing them to make strong offers. This includes PRIMATA Mortgage’s 21-day close option, the cash-backed offer option, the zero-day financing contingency option, and many others, subject to borrower qualification.

PRIMATA Mortgage also provides its clients with an option to lock-in their interest rate whilst they shop for a home. This option is tremendous considering that we are in a rising rate environment.

So, if your dream is to become a homeowner, why wait?

Real estate continues to be a good investment in 2022, and companies like PRIMATA Mortgage are making home ownership attainable for home buyers, even in this extremely competitive market.

Act now and make your ownership dreams come true! DREAM. ACT. OWN.

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