Buying or Building a New Home in 2022? Here are 6 Factors to Consider 

Amazing! Buying or Building a New Home in 2022? Here are 6 Factors to Consider 

Information about Buying or Building a New Home in 2022? Here are 6 Factors to Consider 

Phil Puccio

Image of a partially built house

After the biggest disruption in a century, by 2022 almost everything on planet Earth – from hobbies to house building – will be triggered by the effects of the COVID pandemic. One trend is certain for home builders and homebuyers. There will be uncertainty.

While trying to predict the trend in housing construction may seem like a pointless exercise, it needs to start with a clear but decidedly positive starting point. Mashvisor notes: “A year since the pandemic began, the housing industry has continued to show resilience. Double digit home appreciations, low mortgage rates and the growth in the economic confidence index were things that couldn’t be predicted as of April 2020. According to research by major real estate companies, the housing market will continue to grow in 2022. ”

Every component of the housing ecosystem can look forward to these six trends in 2022.

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The six most important living trends for 2022

Because of the pandemic, the housing industry and the customers who buy it have acted counterintuitively in many ways. However, the old adage is more true than ever. Looking back is always 20/20.

According to Mashvisor, “during the height of the coronavirus pandemic, many people predicted a housing-related recession in 2020. In reality, there has been an unexpected boom in property demand that has not been seen since 2006. The fact that the housing sector was booming during a period of short-term hysteria and inflation could be an indicator of how the housing market has performed. “

As usual, the coming year will not be a “festival or famine” for the housing industry, but a little bit of both. .

For builders: construction costs should go down

Most apartment developers and home builders spent 2021 wringing their hands and wondering when the supply chain would return to normal. this source Notes: “A large part of the problem with low inventory in the new build segment was the high cost of production. There was (also) an inflation problem, albeit a short-term one, that affected the manufacturing industry. This has driven up the prices of building materials for houses and even automobiles. Timber prices alone increased new home prices by about $ 36,000. In the real estate market in 2022, with sustained economic growth, bottlenecks in the supply chain will be eliminated and many companies will replenish their shelves. “

Container boats docked off the coast

In December the time had finally come Messages that the supply chain problems subside. “The epic port traffic jams are easing. Shipping prices are falling from sky high levels. Deliveries are speeding up a bit. Companies are still grappling with a worrying shortage of truck drivers. Critical components, including computer chips, remain scarce. And the Omicron variant threatens to put pressure on the supply chains again. Nevertheless, there are indications that bottlenecks are gradually being resolved. “

For buyers: everything screams “buy now!”

Marked by record prices and bidding wars for existing homes, many potential homebuyers knocked down and saved their money in 2021. They waited for the supply-demand equation to inevitably reconfigure itself. Even first-time buyers with bigger paychecks and stimulus funds in the bank are likely to rush in the coming year. If the stock of new and existing apartments increases, this could ensure robust demand.

Many in 2022 Experts | think, “We’ll see these buyers come back to the market in droves. While prices may still be high in 2022, given the high airfares we saw in 2020 and 2021, they likely wouldn’t appreciate in value. “

Higher mortgage rates could dampen demand

The mortgage rate in December 2020 was 2.66% and a year later it was 2.75%? While this will hardly change over the course of the year, the financial experts for residential real estate see an increase in this interest rate in 2022, albeit still lower than a few years ago, which will dampen demand for new mortgages slightly.

According to Freddie Mac, the 30-year fixed mortgage rate will rise to 3.8% in the fourth quarter of 2022. If the price-inventory problem persists, this would have a stabilizing effect on price growth. Freddie Mac predicts that home prices will rise to 4.4% in 2022, while new and existing home sales will hit 7.1 million in 2021 and then decline to 6.7 million in 2022.

Not much to choose from

Raw land with sale sign

For hundreds of years it has been said, “Buy land. You can’t do it anymore! ”This statement shows why most clichés are true. They tend to be specific.

This lack of land – more precisely, Land for housing construction – will be a trend for home buyers and builders in the coming year. In a recently published National Association of Home Builders (NAHB) Survey: “76% of the building owners stated that the total supply of developed land in their areas was low to very low. This is an all-time record – by a wide margin – since the NAHB began collecting the information in the 1990s. The previous record was 65%, recorded in 2018.

“In response to questions from the NAHB / Wells Fargo Housing Market Index (HMI) survey from September 2021, 46% of single family home builders said the supply of land was simply low and 30% said the supply of land was very low, for example overall 76% of the clients state that there are problems with the property supply. “

Home buyers will be more cautious in closing the deal

Several of the above factors, along with examples from the Acme Brick Home design predictions for 2022 caused homebuyers to lose perspective and, well, go a little crazy. When homes stay in the market for less than a week and the supply chain stores building materials, appliances, and even furniture on a boat somewhere offshore, home buyers panic and do stupid things.

An example of this can be found in a Article in the Wall Street Journal. “In such a fast-moving market, buyers have little time to make one of the biggest purchases of their lives and sometimes forego traditional protective measures. Many buyers have waived their right to terminate due to insufficient valuation or unfavorable examination in order to make their offers more competitive in the bidding war. “

As inventory increases, home buyers will need more time to consider the impact of buying an older / existing home in 2022. Also, because of the freedom to work from home, some will be leaving their old, city-center apartment entirely and moving to a different one. quieter smaller community.

Real estate values ​​will stay high … or will they?

It has been widely reported that highly regarded real estate agent Zillow has been optimistic if property values ​​remain high for the foreseeable future. this article states, “Zillow’s market forecast assumes that US house prices would have risen 11.8% by April 2022. Zillow Economic Research predicts that annual home value growth will rise to 13.5% in mid-2021 and that home value will increase 10.5% from its current level by the end of 2021. Zillow predicts that sales volume will remain high in the coming year and will reach 6.9 million sales in 2021, the highest level since 2005. “

Recent events call into question the wisdom of the messenger – Zillow. As this news report states, “Real estate company Zillow Group Inc. is pulling out of the home flipping business, saying Tuesday that its algorithmic model for quickly buying and selling homes is not working as planned. The company’s discontinuation of its technology-enabled home flipping business, known as ‘iBuying’, follows Zillow’s announcement about two weeks ago that it would cease all new home purchases for the remainder of the year. “

If Zillow, with all of his technical expertise and billions of dollars in residential real estate investments, is unable to accurately predict the future value of homes, real estate agents and their clients may want to carefully consider any “expert” advice on potential property appraisals.

Barring unforeseen disasters, 2022 could be a good year for builders and buyers. However, the effects of inflation, new variants of COVID, or other market disruptions could change everything. As always…Reservation up. “Let the buyer watch out.”

Are you planning to build or renovate a home in 2022? Ask the experts at Acme Brick about sustainable, low-maintenance brick construction and a wide range of home improvement products.

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