Should You Give Up on Buying a Home This Year?

It may be time to put your plans on hold.

It would certainly be fair to say that 2021 was a tough year to buy a home. Last year, inventory was extremely sluggish, and home prices were sky-high.

Today's housing market is comparable, only with one key difference -- mortgage rates are now through the roof. Whereas it was more than possible to borrow affordably for a home in 2021, since the start of 2022, mortgage rates have risen sharply, to the point where they're now at their highest level in over a decade.

If you've been struggling to buy a home, you may be reaching your breaking point. But is it time to call it quits? Or should you keep up your house hunt?

Inventory could pick up

Although housing inventory is sluggish right now, listings could pick up in the coming months. First, the spring season is when we typically see an influx of new listings, and this year might follow that pattern.

Also, it's clear that mortgages are getting less and less affordable by the week. Some sellers may opt to speed up their listing plans to get in at a time when buyers aren't totally turned off.

If inventory does indeed pick up in the near term, it could lead to less competition. That means fewer bidding wars and, ideally, fewer scenarios where you're forced to make an offer above asking price.

But for the most part, you shouldn't expect borrowing to get less expensive anytime soon, and you shouldn't expect home prices to drop substantially. They might gradually start to come down if inventory increases, but there's no reason to anticipate a drastic drop.

As such, if affordability is your main concern right now, then it may be time to give up on buying a home in 2022, since that situation is unlikely to change for the better anytime soon. But if a lack of available homes has been a bigger sticking point, then it may be worth keeping tabs on the market and seeing if listings pick up. If they do, and you can afford a home at today's prices and mortgage rates, you may have an easier time buying later on in the year.

Coping with disappointment

It can be disheartening to have to pull out of the housing market after spending time searching for a place to call your own. But if today's prices and borrowing rates are putting homeownership out of reach, you're better off not overextending yourself and instead looking to the future.

In fact, a good way to cope with the letdown of not being able to buy a home this year is to funnel your energy toward saving more money so you're in an even stronger position to buy a home next year. That could mean becoming a stealth budgeter or taking steps to boost your income with a side hustle.

Granted, there's no guarantee it will be easier to buy a home in 2023 compared to what the market looks like right now. But there's nothing wrong with being hopeful. And there's also reason to be.

In time, housing inventory should pick up to some degree, and that's apt to cool the market off to some extent. This isn't to say homes will magically drop down to pre-pandemic prices once 2022 comes to an end. But we may find that homes become more affordable in 2023.