Buying A Home In 2022
With what seems like everyone talking about the real estate market in some way nowadays, we get a lot of similar questions. Renters continuously ask us if they should rent or if it is time to finally buy a home. For those that are renting, there is a chance that you think about that question more often than you will admit. These questions typically come up when it is time to renew your lease, and your landlord is coming with yet another rent increase. According to data from the Census, rents have risen every year for the past few decades. Are you thinking about buying a home in 2022? Here is what you should know.
Before we get in to any real decision making, it is important to have some type of understanding of what is going on in the housing market. Even though you might think you know what is going on, it is always nice to have a refresher. Knowing what is going on and what to expect in the housing market will help you make your decision. After all, buying a home is one of the biggest decisions to make that can benefit your long-term financial position.
Rents Continue To Rise
Rents are increasing at historic levels this year. We have all heard about housing prices shooting up, but have you ever thought about what that means to rental prices? Of course, if one goes up, the other probably has too. According to data from realtor.com, rental prices are surging throughout the country and do not look to slow. In the graph below, there is a visual representation that shows how rents are increasing based on what you are renting.
For those who are renting, if you plan on signing a new lease, get ready to pay more. Your monthly living expenses will likely go up, on average, by close to 20%. This makes it even harder for renters to save up and eventually take the homeownership leap. Rising rents can impact your monthly budget, and can have a large impact on your financial well-being. The biggest factor of a rental increase is that it makes it even harder to save up for your home down the line.
In contrary to rents, your monthly payment on your mortgage never goes up (if you have a fixed rate mortgage). This is one of the key benefits of homeownership, the ability to lock in a monthly rate that you are able to budget around for the next 30 years. In fact, this is exactly why real estate is an inflation hedge in the current economic landscape. With rents already on the rise, most people will see an increase in their cost of living per month. However, homeowners are able to adjust for their price increases without having an increase in their living cost. According to Danielle Hale, Chief Economist of realtor.com:
“With rents already at a high and expected to keep going up, rental affordability will increasingly challenge many Americans in 2022. For those thinking about making the transition from renting to buying their first home, rising rents will remain a motivating factor. . . .”
Buying A Home In 2022
There is no better time to start your homeownership journey than in 2022. While you might have seen rates increase, it is important to realize they are still historically low, even compared to the past 10 years. For those who are financially ready and able to make the leap to homeownership, we would recommend it. There are many benefits to homeownership and financial stability is one of the reasons.