Should I Buy a House in 2022 or wait until 2023 - US housing recession 2022 Update

Should I Buy a House in 2022 or wait until 2023 - US housing recession 2022 Update
Is 2022 the year you should pull the trigger on buying a house?
Or is the housing bubble about to pop, which could plunge prices and allow you to make the housing deal of a lifetime?
There is new information on home prices just released that you have to know about before making that decision!
Some agents might tell you that asking prices for homes are coming down, which is true. But we need to look beneath the surface to understand what is going on in the real estate market. We see that 15% of sellers have dropped the asking price of their homes in the last four weeks. That’s up from 9% at the same time a year ago in 2021. So home sellers are starting to back off on asking for those giant prices more quickly.
But the fact remains that prices are still through the roof all over the place. Even with those seller prices coming down, you are still blasted by high mortgage payments if you are a homebuyer. The typical mortgage payment for a new home purchase is up 42% from a year ago.
Let’s say I bought a new house in May 2021. My monthly mortgage payment was $2,000. Now you come along, and you’re buying the same house in May 2022. But mortgage payments have gone up by 42%, which means your monthly mortgage payment is $2,840. That’s HUGE. That is an extra $840 per month leaving your pocket. That is the equivalent of you paying $10,000 more per year for the exact same property as me.
This big increase in monthly payments is largely due to the mortgage rate sitting at 5.27% as of May 1. It was at 2.96% just a year ago and has been climbing every month in 2022. The last time it broke 5% was in April of 2010, when the housing market was in freefall.
That is the kind of increase that will have many people shying away from buying right now. Many people will wait it out and put another year into the home they’re already in or keep on renting and hope that their landlords are kind to them and don’t start demanding more money every month.
If you have been around for a while, you might be thinking about what happened the last time home prices kept getting higher and higher and mortgage payments went through the roof.
That was back in 2008 when the US real estate bubble burst. Prices had hit all-time highs in 2006, and everybody and their brother were getting qualified for a mortgage, even if they couldn’t afford it. By early 2008, you saw the largest drop in home sales in 25 years. We had more than THREE MILLION foreclosures by the end of that year.
Home prices totally bottomed out by 2012, but all those banks were desperate to get whatever they could for the homes they foreclosed on. They had started bleeding money from all those defaulting loans. People who had waited out the bubble bursting could scoop up incredible properties at huge discounts. Are we about to see the same thing happen with prices and mortgage payments so high in the current housing situation? Are all these people paying enormous amounts of money for homes and spending way more than market value going to be able to avoid foreclosure?
Some exciting statistics point to another real estate bubble possibly popping shortly. For starters, we are seeing that pending home sales are cooling off. They are down 4% from last year, and it’s the biggest drop since the middle of February 2022. The number of actively listed homes on the market is also down. Down by quite a lot, if I am being honest with you. They are down 18% lower than a year ago at this time. New listings of homes are also down, 6% from a year earlier. This isn’t a blip on the radar, either. The number of new listings has declined since the middle of March.
The fact that we are seeing price reductions pretty consistently suggests that demand is starting to drop, and homeowners are not being able to set prices that are really far beyond the market value. If moving is a priority for you right now, hopefully, you can avoid a bidding war and those record-high prices. If you have some wiggle room for when you want to be in a new house, keep your eyes open to these trends. Deciding to buy a house in 2022 is still a gamble, but if you practice patience, you might start seeing bigger drops in the months.
👔 Ron cohen
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