Last year was a record-breaking one for the U.S. housing market. Inventory dipped to its lowest point in history mortgage rates plummeted, and the median home price notched a new high -- rising a whopping 18.8% over the year.
By most accounts, 2022 is supposed to amount to a slightly less harrowing time in real estate. Economists projected rates will rise (they have, albeit temporarily), inventory will improve (it has, but barely), and home prices will continue to climb, just at an increasingly slower pace.
Has that last one come true, though? Let's take a look at the data we have so far -- as well as what we can expect as 2022 continues on.
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Home prices in 2022
We only have data from January and February, but so far, it looks like home prices are indeed rising at a slower pace than last year. Both months' growth rates come in well below last year's 18.8% average.
The problem? While price growth slowed down at the start of the year, it appears to be picking up steam again as we head toward spring.
According to Realtor.com, January saw median home prices rise just 10.3% compared to the year prior. In February? Prices jumped nearly 13%. In the last week of February alone, the national median home price rose 14% year over year.
There's no telling if that upward trend will continue, but it could certainly happen. The conflict in Ukraine has pushed mortgage rates downward in recent weeks, sending buyer interest up with it. And despite recent improvements in supply, active inventory is still down nearly 25% compared to last year.
As we near the typically hot spring homebuying season, this could all mean yet another high-double-digit spike in pricing.
Prepare yourself
If you're considering buying or investing in real estate, prepare for those higher prices now. Set aside extra for your down payment if possible, and think about shopping in a lower price range so you can comfortably bid over asking price. (January saw the highest bidding war rate on record, so you'll likely face steep competition!)
You might also think about co-buying with someone or looking at properties that may not have as much interest -- like fixer-uppers, multifamily homes, townhomes, duplexes, and condos. On some of these multi-unit properties, you may be able to use an FHA loan and house-hack your purchase, meaning you'd live in one of the units and rent the rest out to tenants. This could even cover your mortgage payment in full -- especially given today's rising rents.
If you're planning to sell a property, you may be able to maximize your profits by waiting a bit. Buyer demand typically spikes in spring and early summer, particularly on single-family properties. According to ATTOM Data Solutions, the absolute best time to sell a house is in June -- namely June 22, when sellers take home a 10.5% premium.
Eye on the price
Housing conditions are constantly in flux, and while we can't predict just how much prices will grow during the remainder of 2022, most experts agree on one thing: They're not going to decline anytime soon.
If buying or investing in real estate is on your radar this year, the sooner you act, the better. Considering the Fed is poised to increase interest rates later this month, there might not be a more affordable time to buy than now.
