Finally, some good news for home buyers.
- Buyers have struggled with record-high home prices for many months.
- One data provider anticipates a slowdown, which could make homeownership more attainable.
Since the start of 2021, home prices have been on a tear. Low mortgage rates have fueled a massive surge in buyer demand. And with housing inventory being so limited, sellers have had the upper hand over the past 12 months.
Listing prices have been higher on a national level — not just in hot markets. Making matters worse, bidding wars were rampant in 2021’s real estate market, driving home prices upward even further.
In December, home prices rose 18.5% compared to the year prior on a national level, according to data from CoreLogic. On a month-over-month basis, home price gains rose by 1.3% in December compared to November.
But now, CoreLogic says the housing market is beginning to change. It anticipates annual home price growth will slow to 3.5% by December 2022.
Or, to put it another way, the housing market may, over the course of the year, start to equalize so sellers no longer have such an extreme upper hand. That’s a scenario buyers will want to take advantage of.
Put yourself in a strong position to buy
If you’ve been trying to purchase a home but have been shut out of the market due to high home prices, you may have better luck during the latter part of 2022. To gear up for that scenario, there are a few key steps worth taking in the coming months.
First, check your credit report and address any glaring problems you see, like delinquent debts. At the same time, review your credit score (which you generally won’t find on your credit report, ironically enough). It takes a minimum credit score of 620 to qualify for a conventional mortgage. But in reality, you’ll want to get your score a lot higher than that to be eligible for a competitive interest rate on a home loan.
Next, aim to sock away as much money as you can for a down payment. While home prices may start to come down, they’re at such high levels right now that you should not, by any means, anticipate being able to snag a bargain at the end of the year. The more money you have available to put down on a home, the more options you’ll have.
Finally, start asking around for recommendations for a real estate agent. Though you don’t have to use an agent to buy a home, since there’s no fee on the buyer end, why not take advantage of a professional’s help and expertise?
How low will home prices go?
It’s unlikely that home prices will dip back down to pre-pandemic levels in the course of 2022. But that doesn’t mean they won’t drop substantially from where they are now. This especially holds true if real estate inventory picks up nicely during the year.
Either way, any drop in home prices will open the door to more opportunities for buyers. Let’s hope that CoreLogic is right in its projections.
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.
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