Bidding wars, low inventory and homes flying off the market within days can easily dampen the spirits of any prospective homebuyer in Utah. (How many times have you checked a real estate website only to see that the house you’ve been eyeing has already been viewed by hundreds of others?)
Unfortunately, it seems like things continue to move in an upward direction, as Realtor.com predicts that Salt Lake City will have the hottest housing market in 2022. No, the combination of higher prices and steeper interest rates isn’t going to make things easier on buyers. But it also might not be as bad as you think.
Here’s what you can expect for the coming year — and also why you shouldn’t give up all hope.
Home prices will likely keep rising
If you were hoping for a break from the sticker shock induced by the current market, well — don’t hold your breath just yet. The bad news is that home prices aren’t likely to drop anytime soon. Realtor.com says you can expect Salt Lake City’s median sales prices to rise about 8.5% in 2022. The good news is that the hikes likely won’t be quite as dramatic as 2021, when prices went up as high as 27%, according to the 2022 Housing Forecast Executive Report.
“With the Federal Reserve raising interest rates, I think we will see the price of homes continue to increase, just not at the rate we have seen over the last few years,” said Josh Brizendine, vice president of operations at Homie Loans.
Unfortunately, even with the slower climb, those searching for their first home will still feel a pinch.
“It will certainly affect affordability, especially for first-time buyers,” Brizendine added.
Waiting to buy may cost you
So, just how much are those interest rates going to rise? Though it’s not what any prospective homebuyer wants to hear, Bankrate reports that the Federal Reserve is likely going to hike rates to a new high since 2005 this year. (They’re trying to combat inflation, which has reached its highest point in 40 years.)
After hearing this and factoring in rising home prices, it can be tempting to hit the brakes and wait for things to settle down before making an offer. But the question of when to buy a home is a tricky one to navigate because multiple factors play into it.
If it’s a competitive time of the year, you may need to go the extra mile to get your offer to stand out. (i.e., offering well above the asking price.) Yet if you wait for rates to climb higher, you could be shelling out a lot of extra money over time. Meanwhile, those home prices will continue to go up as well.
“This time of year is generally the prime season for home buying and the demand for homes is still strong,” says Brizendine. “It will be interesting to see if shoppers will pause to see how the higher rates affect housing prices, or if they buy now before the next rate hike.”
There are some who make the case for buying now rather than waiting. Mark Zipperer, managing broker and founder of The Zip Group in Chicago, told Forbes magazine that he believes first-time buyers should pull the trigger sooner rather than later.
“Homeowners typically have a net worth that’s 40 times greater than renters,” Zipperer said. “Buying, even if you have to start small, is a path to building wealth.”
Still, everyone has to make the decision that’s right for them. If you feel overwhelmed and unsure of how to proceed in the current market, it’s a good idea to reach out to an experienced realtor. They can walk you through your options and help you determine whether now is the best time to buy or not.
Here’s how you can make your offer stand out
Before your hope for securing your dream home (or any home, for that matter) dwindles, you should know that homeownership is still very much possible, even in the current market. It might just take a little creativity — and a little help from Homie.
You’ve probably heard of a few ways to make your home offer stand out from the competition (offer above the asking price, put down more earnest money, etc.). But there’s one method that’s been proven to greatly boost your chances of sellers accepting your offer: Pay in cash. And if you think that’s outside the realm of possibility, you probably haven’t heard of Homie Cash.
With the Homie Cash program, Homie will advance a cash loan you can use to purchase a home. After closing, you can refinance the loan into a long-term mortgage you can afford.
“A product like Homie Cash will be extremely valuable to buyers as it will help ease anxiety for sellers concerned about financing falling through due to higher rates and affordability issues,” Brizendine says.
If you live in Utah, Colorado, Arizona, Idaho or Nevada, you can learn more about Homie Cash (or get pre-approved today!) by visiting homie.com/cash.