Housing was one of the strongest sectors of the economy for 2021, but rising interest rates and inflation are causing many to wonder if sales will continue as strong in 2022.
Lawrence Yun, chief economist for the National Association of REALTORS, believes the number of home sales will decline in 2022 but will still outpace pre-pandemic levels, based on continuing demand from homebuyers. More inventory is becoming available from home builders and from homeowners who will no longer receive loan forbearance and may decide to sell their homes instead.
Fortune.com points out that the Federal Reserve predicted 1.8% inflation for 2021, but the real number is closer to 6.2% set in October – the highest rate since 1990. In real numbers, if a buyer puts 20% down on a $500,000 home, they will have a monthly payment of $1,682 at 2.98%. At 4%, the monthly payment would be $1,910.
So, should you buy a home or wait it out? If economists can’t agree on their outlooks, you probably shouldn’t try to time the market either. Housing is a terrific hedge against inflation, so instead, ask yourself what you can afford and go from there.