The real estate market is constantly changing, and it can be tough to keep up with all of the latest trends. If you’d like to stay in line with the curve, keeping track of the current events is crucial to plan for the next.
The year 2022 was fantastic! With all the happenings across the country, and prices rising, you might be wondering about the effects it will have on real estate in 2023.
Will we see even more rising home prices? What does this market change in the current economic environment? If you’re buying, selling, or staying put, these are the real estate 2022 trends that are worth watching!
Real Estate Trend #1: The Home Buyers’ Picks: Slim Selections
If you’re on the hunt for a brand new home, you may find that the pickings are slim. In many areas of the country, the number of homes for sale is well below what it was last year at this time.
It may look to be positive news for sellers, sellers it can be challenging for buyers looking for their perfect home. With such limited options, buyers may compromise on their must-haves or face bidding wars for the few available properties.
If you’re looking for a new home, staying ahead of the curve is vital as knowing what to expect. Three points to remember when buying a home in the current housing market.
Real Estate Trend #2: Rising Home Prices
It’s not difficult to see that the price of a house has been on the rise for a considerable period. Based on the National Association of Realtors, the cost of housing has increased by 5 percent per year from 2012 to the present.
While this may seem like bad news for buyers, it can be good if you’re looking to sell your home. With prices continuing to rise, you’re likely to get a higher return on your investment when you sell.
What do higher prices mean for Buyers?
If you’re considering purchasing an apartment in this pricey market, you must know the number of houses you can afford. Be sure to stick to that budget regardless of what happens. Don’t succumb to the pressure to purchase because you’re bored of watching other buyers rip houses worth buying from the market.
We understand that waiting for the perfect home within your budget can be frustrating. However, you’ll be thankful that you took the time to enjoy financial security instead of the enormous, heavy, dangling burden of mortgages!
To be confident in buying an apartment this year, you should follow these guidelines:
- Limit your house payments to not greater than 25 percent of your take-home income, which includes interest, principal, property taxes, homeowners insurance, and private mortgage insurance (PMI); when the down amount is less than 20 percent. Also, don’t forget to add the homeowners’ Association (HOA) costs to your budget.
- At a minimum, 10-20% is the downpayment. We recommend a minimum of 10%, as any less than that will sink you with charges and interest. A 20% or greater down is better since you will not have to pay PMI, an additional cost added to the mortgage that protects the loan provider (not yours) if you fail to make your payments. A sizable down payment such as this is feasible! All you need to do is be focused and patient. What’s the chance? You may be capable of saving five figures for a down cost at this point next year!
- Select a fixed-rate 15-year conventional mortgage. The most affordable homeowner loan you can get is a fixed-rate 15-year mortgage. Rip-offs, such as the 30-year mortgage FHA, VA, USDA, and variable-rate mortgages, can cost you thousands of dollars in interest and fees and keep your debts for years. We’re not interested!
What do higher prices mean for Sellers?
A reasonable profit could be just around the corner! It’s great because you’ll need that extra cash to purchase your next house. To secure the right price for your home, you must engage an experienced real estate agent knowledgeable about your local actual property market.
Be sure to be patient and wait for the right deal. Specific buyers might attempt to smack you with the lowest price. If you’re not looking to sell, wait for an offer that will give you the highest profits. Be aware that the less anxious person is the winner in negotiations.
Real Estate Trend #3: Mortgage Interest Rates are Still Low
The interest rates on mortgages have gone up over the past couple of years, and they have not shown any signs of stopping soon. It gives you a fantastic opportunity to invest in a home or apartment, as you’ll be able to make smaller monthly payments than you would have in the past.
However, not everyone knows this fact, and many people are still waiting to buy a home because they think the interest rates will go up soon. In reality, the interest rates could stay low for many more years, so there’s no reason to wait any longer.
Even if you don’t intend to move anytime shortly, you may be able to take advantage of these meager rates of interest and reduce your repayment timeframe by financing your home.
Real Estate Trend #4: Online Real Estate Services Are Flourishing
Many buyers and sellers are purchasing and selling their homes online due to the rise of real estate websites. These services make it easy for buyers and sellers to connect, and they provide a wide range of tools and resources that help buyers find the right home and sellers get the most reasonable price for their property.
Real estate websites are gaining popularity since they provide several pros over other methods like newspapers or brokerages. For example, online services allow buyers to search for properties anywhere in the world, which makes it easy for them to find homes that meet their needs. They also provide a wealth of information about each property, including photos, maps, neighborhood information, and school ratings.
Sellers also benefit from online services, as they can reach many potential buyers without paying commissions. In addition, online services provide powerful marketing tools that help sellers showcase their homes to potential buyers.
Real Estate Trend #5: Risky Buying Options Are More Accessible
It’s no secret that the housing industry in the real estate sector is growing. Home prices are rising, and finding the perfect property can be more complicated than ever. However, this booming market has also led to several new buying options that make it easier for people to purchase a home.
Rent-to-Own
If you’re tempted to buy an apartment but aren’t able to afford it, some sellers, such as Divvy offer a rent-to-own agreement. With this (wrong) arrangement, you must rent the house for a period ranging from a few months to several years before becoming the proprietor.
The “plus” aspect of renting-to-own is that it allows you to purchase a home fast and without having to wait for the down cost. (But you’re aware of what we think about this. ) Also, you don’t have to be eligible for a mortgage as soon as you apply.
The disadvantage of renting-to-own is that it can make your rent more expensive since part of your monthly rent will go towards future homeownership. With the rising cost of rent across the nation, this is not the time to pay more!
And if you decide you’re not interested in buying the house or if something occurs to breach your agreement (like the lender doesn’t approve you), then you’ll not be able to get the additional installments back. They’ll be an utter waste! Additionally, you could be required to manage repairs and maintenance on your own, even while renting. It leaves you in a highly vulnerable financial position.
The most important thing to remember is that if your finances can’t afford homeownership, don’t purchase one. Keep saving for the down payment and ensure your lined-up financial ducks. It’ll happen faster than you imagine if you’re willing to do the best you can!
Down Payment Credit
Another real estate risk to stay clear is taking out personal loans to pay the down payment. It is the same as purchasing an apartment with no down. You borrowed the total amount of the house, except that you’ve taken it out from two different firms at two different rates (which is two times as many problems).
A home purchase without any money down is not an option. Be aware that you should make a down payment of 10% to 20 percent of the value of your home. Buying a home with less than this will cost you the other financial goals you have set by being forced to pay more interest and charges. Luckily, not all mortgage lenders will allow you to do this, and it could even prevent you from obtaining the amount of mortgage you require.
Conclusion
It’s clear that there are a number of new buying options available in the real estate market, and many of these are only going to become more popular in 2023. However, before you jump into any of these risky arrangements, it’s important to make sure you understand the risks involved. Be sure to consult McCarthy Realty or your trusted realtor before making any decisions about purchasing a home this year!