House Hunting in 2022? 15 Things to Know

It's fair to say that 2021 was a challenging time to buy a home. And 2022 may not be all that different. If you're looking to purchase a home in the new year, whether for yourself or as a real estate investment, here's what you need to know.

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As of late 2021, the U.S. real estate market is short about 1 million homes to meet buyer demand. In 2022, inventory issues may continue to be a problem, especially if pandemic-related fears stop sellers from listing their properties. If you're looking to buy, you may not enjoy the selection you're hoping for.

Does the Housing Market Need More Homes? One Expert Thinks Not

As of September, U.S. home prices were up 19.5% on a year-over-year basis, according to the S&P CoreLogic Case-Shiller National Home Price Index. In the new year, home prices are likely to remain inflated in the absence of inventory. If you're eager to buy, prepare to take on a higher mortgage than normal.

Buyers aren't likely to back off come 2022. Since housing inventory will likely remain low, you'll need to prepare to duke it out with competing buyers -- and potentially get stuck paying well over asking prices.

ALSO READ: 3 Bidding War Strategies to Use in Today's Housing Market

Because the competition for homes may be stiff in 2022, getting yourself a mortgage pre-approval letter is important. Doing so sends the message to sellers that you're a serious buyer with the finances to support a home purchase.

Mortgage rates have sat at competitive levels since mid-2020. And the good news? They're likely to stay low in 2022, which could help make up for higher home prices.

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When home values rise, property taxes tend to follow suit. In addition to taking on a higher mortgage payment in 2022, you may end up having a larger property tax bill on your hands. You'll need to make sure that's an expense you can afford.

ALSO READ: What Goes Into Calculating Your Property Tax Bill?

Normally, the housing market enjoys an influx of homes during the spring. But in 2021, that didn't happen -- and chances are the same will hold true in 2022. There's still a lot of uncertainty surrounding the pandemic, and with COVID-19 cases soaring once again, sellers may not feel ready to list their homes during the first part of the year.

While you shouldn't expect housing inventory to be all that robust in the coming months, it could still pay to house-hunt at that point. The winter is a less popular time to buy a home, so you may find yourself up against fewer competing buyers if you pursue that option.

ALSO READ: Should You List Your House in the Winter?

Because home prices are so inflated, you may find it's a struggle to afford a home in your target neighborhood. If that's the case, it pays to consider an up-and-coming neighborhood instead. You might snag a great deal on a home -- one you can either stay in or sell at a nice profit once that neighborhood becomes more developed and grows more popular.

As a homebuyer, one thing you may be looking for is a street or neighborhood without a lot of traffic. Keep in mind, though, that many people are still working from home due to the pandemic. So, the traffic patterns you observe in the course of your house hunt may not be indicative of what traffic is normally like. Talk with your would-be neighbors to get the real scoop.

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It may be a seller's market throughout 2022. But that doesn't mean you absolutely must offer up the exact price every seller wants. You never know when a given seller might negotiate, allowing you to end up with a more affordable mortgage.

These days, a number of sellers are forgoing home inspections in an effort to get their offers accepted. That's something you probably don't want to do. A home inspection could reveal major issues with the property you're aiming to buy. And skipping it could leave you on the hook for costly repairs you can't afford.

ALSO READ: Home Inspections for Buyers: Tips & Checklist

Because inventory will likely be sluggish in 2022, you may find that homes in your area are scooped up the second they hit the market. So, if you plan to attend open houses, be ready to show up prepared to make an offer on the spot.

Mortgage rates should remain fairly competitive in 2022, even if they rise a bit from today's levels. But it's still important to seek out quotes from different lenders before settling on an offer. Rate-shopping could be your ticket to snagging a better deal.

Next year, you'll have more leeway when it comes to getting a mortgage backed by Fannie Mae or Freddie Mac. The limit for conforming loans is rising to $647,200 in most of the country. In high-cost areas, that limit is climbing to $970,800.

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Just as it's been tough to buy a home in 2021, so too might buyers struggle in 2022. But now that you know what to expect from the housing market, you can put yourself in a stronger position to come out victorious.

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