Should You Buy Real Estate in 2022? 6 Things to Consider

In 2021, the housing market experienced a record-setting boom. According to the National Association of Realtors, home sales are the best in 15 years. Given the positive correlation between housing demand and low interest rates, sales were at an all-time high.

While sellers have enjoyed 2021's hot market, some buyers are now wondering if 2022 will be a more economical year to purchase a home. Ultimately, the decision to invest in a property is up to the buyer. Here are some things to consider before entering into a real estate transaction.

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Affordability is at the top of many buyers ' lists when it comes to making a home-purchasing decision in 2022. Exactly how affordable a home will be in 2022 hinges upon the mortgage interest rates. According to the Economic Strategic Research Group, mortgage interest rates are set to average around 3.3% in 2022 -- due, in part, to the impact of the supply chain disruption. That is up from the average of 3.1% in 2021. This increase will impact overall affordability and, ultimately, your purchasing decision in 2022.

The Federal Reserve has signaled that its rate increases will likely not take effect until 2023. A rate increase makes it more expensive for banks to borrow from other banks, and this cost is often passed on to consumers in the form of higher interest rates. Since this hike is predicted to take effect in 2023, 2022 may be a better year for consumers than subsequent years.

ALSO READ: Federal Reserve Pledges Low Interest Rates Through 2023: What It Means for You

The housing market has seen record-setting highs. According to the Case-Shiller U.S. National Home Price Index, the price of housing rose by 7% to 19% from September 2020 to June 2021. It most certainly has been a sellers' market! While it is forecasted that the double-digit home price increases will likely taper off, the rise in housing prices will probably continue. So, in 2022, buyers can still expect home prices to be on the rise.

ALSO READ: Are Real Estate Prices Going Up in 2022?

In 2021, the housing market was marked by low supply, but in 2022, that will change. The inventory increase will stem from both new constructions and an upsurge in foreclosures. This is evidenced by the rise in building permits for future homes and the end of forbearance programs.

These facts are a plus for buyers in the market. However, while the housing market is expected to have more inventory, buyers should note that the inventory still will not be back at pre-pandemic levels. All things being considered, though, the conditions may still be a bit more favorable for buyers.

ALSO READ: Housing Supply and Demand in 2022: What to Expect

While there may be more inventory in 2022, consumers should not expect bidding wars to end so soon -- the competition is sure to remain stiff. According to Realtor.com, first-time homebuyers will be impacted by this phenom as they struggle to compete with other buyers.

In 2021, the influx of remote work gave buyers a newfound ability to purchase a home in any location, but it is unknown just how this will play out in 2022.

With the uncertainty surrounding people working from home indefinitely or returning to the office, many potential homebuyers are left in limbo when it comes to whether they should purchase a home in 2022. For now, this is a housing market X factor.

ALSO READ: Remote Work vs. Offices: Which Will Win in the Post-Pandemic World?

Like most investment decisions, when it comes to purchasing a home, the choice is ultimately yours. This can be a difficult decision, so be sure to take your time to review the facts and figures before making a long-term investment decision. A well-informed decision is always the best decision.

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