While exorbitant prices and ruthless bidding wars kept thousands of potential buyers from landing a new home last year, experts say they may have a better chance in 2022.
But it is a big one maybe.
What has been a seller’s market will seep into 2022, as affordability will remain difficult with interest rates and prices continuing to rise, according to Realtor.com housing forecast for 2022. Despite this, the real estate listings website predicts strong growth in home sales over the coming year.
In several communities, sales were very strong in 2021. Until November 30, sales of single-family homes had increased by 14.9% in Framingham (from 545 in 2020 to 626 in 2021), from 20.6% in Marlborough (248-299) and 22.9% (271-333) in Franklin, according to The Warren Group, a Peabody-based real estate and banking data provider.
According to a survey of more than 20 U.S. economics and housing experts, Americans can expect house prices to appreciate slower, inflation to drop but interest rates to rise. 2022, said Lawrence Yun, chief economist and senior vice president of research for the National Association of Realtors.
Locally, the median price of a single-family home sold in Framingham in the first 11 months of 2021 was $ 563,250, up 14.9% from the median of $ 490,000 a year earlier, according to The Warren Group. Natick’s median sale price through November 30 was $ 736,500 (up 5.1%), Marlborough’s $ 480,000 (up 9.1%), Milford’s was $ 440,000. $ (up 10%) and Franklin’s of $ 589,900 (up 16.8%).
The Daily News recently spoke to three local mortgage experts about their forecast for the housing market for 2022 and why buying a home this year might be cheaper than waiting until 2023.
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The supply shortage will persist
“We’re going to continue to see the housing shortage that we’ve seen – it’s been a problem for the past seven to eight years, but it’s an even bigger problem over the past year and a half,” Wes said. Oliver, owner of Prestige Home Mortgage, a full service mortgage broker based in Northborough. While the bidding wars have calmed down, he still describes the market as “highly competitive”.
“I don’t see this changing for a long time,” he said. Still, it will be slightly less difficult to land a home next year than it is this year, he said.
Rick Scherer, CEO of OnToMortgage in Framingham, also sees tight housing stock continuing and believes the market will favor sellers for a few more years.
Global supply chain problems are likely to persist, he said, along with construction delays, labor shortages and high prices for lumber, concrete and windows.
“I think the market will remain stable, but we may not see the intense bidding wars that we have seen in some local areas like Franklin and Milford and Upton,” said real estate agent Robyn Nasuti, of ERA Key Realty Services in Upton. It predicts a more balanced market in 2022.
“Buyers are more and more tired of unanticipated sales,” she said. “We might see less forgoing inspections and putting money on the table for assessments.”
When it comes to the most popular style of home, Nasuti predicts that more one-story homes, such as ranches, will sell out faster. The main needs that homeowners are looking for include flexible space, gyms, finished basements and home work areas, she said.
More modest price increases
“Prices will continue to rise, but maybe not at the same rate we’ve seen,” Oliver said. However, many low-income local buyers will likely continue to be excluded from the home buying process and rents will remain high. , he said.
According to Realtor.com’s 2022 forecast by metropolitan area, Greater Worcester is expected to see an 8.2% increase in prices.
But it’s also an area that is likely to see house prices drop over the next year, according to CoreLogic market risk indicator, which studies the health of housing markets across the country.
The company ranks Springfield as the metropolitan area in the country with the greatest chance of seeing house prices fall, and ranks the Worcester, Massachusetts – Connecticut metropolitan area fourth.
Conversely, Milford ranked seventh on Realtor.com’s annual list of the nation’s hottest postal codes for 2021. Access to large job markets was a highlight of the 01757 area, which has a median listing price 6% higher than the Worcester metro area. and 18% higher than national median prices, according to Realtor.com.
Mortgage rates are climbing
A year ago, mortgage rates on a 30-year fixed-rate mortgage were in the historically low 2% range, Scherer said. Those rates have since passed the 3% mark, where Scherer predicts they will stay – or rise a little more – until 2022 due to inflation.
Fannie Mae predicts something similar, anticipating the 30-year rate to average 3.2% in the first quarter of 2022 and 3.3% for the full year. For comparison, the Mortgage Bankers Association forecasts average rates of 3.3% in the first quarter and 4.0% by the end of 2022.
Homebuyers should keep in mind that rates are still at historic lows and the affordability index at an all time high, said John Lucas, president of Prestige Home Mortgage.
“I feel like most home buyers don’t realize the purchasing power they have at current rates,” he said. “Someone who may be waiting to buy in 2023 hoping the market will collapse – even getting the house for $ 100,000 less – will ultimately cost them more as rates rise. ”
Lucas said it’s possible that a buyer who bought a home in 2021 for $ 600,000 will end up paying less interest over the life of the loan compared to someone who waits to buy a home in 2023 for $ 500. $ 000.
If the 2021 buyer made a 5% down payment on the house ($ 30,000) with a loan amount of $ 570,000 at a rate of 3%, their monthly payment would be $ 2,403.14. Their interest paid over the life of the loan would be $ 295,131.48, Lucas explained.
Compare that to someone buying a cheaper $ 100,000 home in 2023. If that buyer also pays 5% (in this case, $ 25,000), they’ll have a loan amount of $ 475,000. But if mortgage rates go up to 4.5%, their monthly payment would equal $ 2,406.76 – a little more than the previous buyer. And the interest paid over the life of the loan would be $ 391,431.88, about $ 96,000 more than what the 2021 buyer would pay for their more expensive home, Lucas said.
“It’s always a great time to buy at the lowest rates ever,” he said. “I think home buyers (who are waiting) for an accident will be kicking each other, wishing they had bought now as homes continue to appreciate.”
Oliver agreed, saying that despite current high house values, lending rates will be low, he said.
“So a lot of people think, ‘We’re just going to wait,’ but you can wait until values go down. But if interest rates go up, you could pay more every month in the meantime,” Oliver said. .
Difficult for beginners
Buying a home will still not be “easily achievable” for first-time buyers, Oliver said.
“We’ve seen a lot of frustrated buyers this year,” said Scherer, from newbies to longtime owners. “We had a lot of people who reached out to us and said they were basically raising their hands and saying, ‘See you next year. “”
These people are still waiting on the sidelines, but when their leases end, Scherer predicts that more inventory will also become available. Then some of those who are tenants can access the property.
Demographically, more single home buyers have bought homes this year in Boston or its suburbs, Scherer said. He expects this trend to continue.
“People always ask when is a good time to buy,” Scherer said. “My answer is always now, unless they plan to stay on this property for at least two years.”
Lauren Young writes about business and pop culture. Contact her at 774-804-1499 or [email protected] Follow her on Twitter @laurenwhy__.