If you’re on the fence about selling, you have a few choices: You can put your house up for sale soon to take advantage of the current demand, you can wait to see how interest rates and inflation play out as they relate to housing (though it could result in a missed opportunity), or you can opt to stay in your current home for the foreseeable future.
Here are three reasons you should sell your home in 2022, along with three reasons you may benefit from waiting:
- Sell in 2022: Interest rates are expected to rise, but remain fairly low.
- Sell in 2022: You’re ready to take advantage of buyer demand.
- Sell in 2022: You need to move.
- Wait to sell: You just refinanced.
- Wait to sell: You’re worried about affording your next purchase.
- Wait to sell: You’re worried about finding your next home.
Sell in 2022: Interest Rates Are Expected to Rise, But Remain Fairly Low
While mortgage interest rates have remained in the historically low range for years now – and have more than once set record lows during the COVID-19 pandemic – they are likely to climb at least somewhat in 2022. While this may seem like a negative for home sellers, rates are still expected to remain low compared to previous decades, and begin the New Year low as well.
“People will want to lock in a low rate now,” says Matthew Mackay, a licensed associate real estate broker and co-founder of the Mackay Dixon Team at real estate brokerage Douglas Elliman Real Estate in New York City.
The average interest rate as of Dec. 9 was 3.1% for a 30-year, fixed-rate mortgage, according to Freddie Mac. Officials from the Federal Reserve have indicated in recent months that an interest rate hike in 2022 may occur, largely to combat inflation. There is other speculation that the Fed will wait until 2023 to increase interest rates. Mortgage interest rates move independently of the Fed’s set rates and can rise on their own, but they often echo hikes and drops set by the Fed.
Even with higher interest rates possible in 2022, they will likely remain low from a historical perspective. Realtor.com predicts that mortgage interest rates will average around 3.3% throughout the year and rise to 3.6% toward the end of 2022.
While the low rates are promising for an affordable mortgage, there are not enough properties on the market compared to the number of buyers who are shopping for a home. Expect rising home prices to balance out low rates, at least in part. While this could stifle some buyer activity, there’s enough demand that home sellers should be able to benefit from the limited supply. “Right now there’s such a large pool of buyers, even if they do get discouraged (and) choose to pull out of the market, it will still be a very active market,” Mackay says.
Sell in 2022: You’re Ready to Take Advantage of Buyer Demand
Especially if you live in a place where home prices are climbing fast and bidding wars are common, homes are likely to see plenty of buyer activity well into 2022, especially at entry-level prices – often purchased by first-time homebuyers.
The price range that’s considered entry level depends on where you live – typically it’s considered the lower third of home sale prices for an area.
Realtor.com reports that it expects the median sale price for existing homes to finish 2021 with 12% appreciation over the course of the year and 2022 to see median prices rise another 2.9%. While prices aren’t expected to climb as high or as fast as they did in 2021, buyer demand remains strong and isn’t likely to disappear.
The slower growth does mean that sellers in 2022 can’t get greedy, however. Mackay says he’s already seeing buyers start to push back on for-sale properties asking too much. In 2022, “I think you’ll see more of the inflated properties sitting around (on the market),” Mackay says.
Sell in 2022: You Need to Move
If you need to move for any reason, it’s still possible to sell your home and find a new one. If you lost your job, you may be worried about your ability to continue to pay your mortgage. If that’s the case, selling may be a valid option. But plenty of others are opting for a life change that involves moving to another state, more room for a growing family or a bigger footprint needed for permanent work-from-home space.
If you’re in a market seeing fast home sales, the lack of inventory can help your home sell, especially if your property falls under the local entry-level price range. “We truly don’t have enough supply in the first-time homebuyer market,” says Mike Miedler, president and CEO of real estate brokerage Century 21.
Wait to Sell: You Just Refinanced
If you’re one of the many homeowners who have refinanced recently, there’s no reason to consider selling your home in the immediate future. Hopefully, your refinanced mortgage has helped ease financial woes by lowering your monthly payments.
Odeta Kushi, deputy chief economist for First American Financial Corporation, which provides title insurance and risk solutions services for real estate transactions, says that since the start of the pandemic, many homeowners have been able to lock into mortgage rates below 3%, which makes selling any time in the near future far less attractive.
If you haven’t considered it yet, refinancing can be a valid alternative to selling your home while rates remain low. Especially if you’re not seeing the right home for you on the market, it’s OK to be picky.
Wait to Sell: You’re Worried About Affording Your Next Purchase
Earlier in the pandemic, concerns about affording a future purchase were more likely to be steeped in employment instability – pay cuts, layoffs and furloughs were happening frequently across the U.S. as businesses struggled to adapt to the economic impact of the global health crisis.
Now, however, if you’re worried about affording your next home purchase it’s more likely tied to the housing market’s quickly rising prices, lack of new homes for sale or potential lack of equity in your home. Don’t be afraid to wait to sell your home if you think the timing isn’t right.
Mackay stresses that there’s no reason to fret about what could happen in the future – prices could level off in future years and real estate naturally goes through cycles, but buyers, mortgage lenders and builders are making smart decisions so far in planning for a stable future. “People are convinced the market is going to crash in a year or two,” Mackay says. “Those people are going to be waiting a long time.”
Wait to Sell: You’re Worried About Finding Your Next Home
The caveat of a strong seller’s market is that as a home seller, you may struggle to find a new home to buy. ”It might discourage an existing homeowner from selling knowing that there might not be that much to buy,” Kushi says.
You could expand your search to include new construction homes, though supply chain issues, labor shortages and red tape surrounding zoning and permits are keeping development slow. To truly help ease demand, Miedler says, the U.S. would have to see single-family home construction double its pace, which is unlikely to happen early in 2022, if at all in the coming year.
Waiting for a more balanced market is a good idea for some homeowners, and it’s unlikely to hinder your ability to get a good price for the house you sell. In a market where supply and demand are more balanced, you’re less likely to see multiple offers and sale prices well above the asking price, but you’ll still see positive home value growth