If you’re ready to upgrade houses, move to a new location, or even purchase your first or second home, what’s the best way to approach it this year? While the real estate market settles into a post-pandemic state, every potential home buyer needs to be aware of financial and market trends.
This is especially true in hot house hunting markets like southern California, where housing is at a premium. Let’s dive into what to look for when buying a house in 2022, and how to prepare for it.
Beaches, sun, arts and culture, and beautiful neighborhoods—whether you’re new to southern Cali or a native, you know there are benefits to living here that you can’t find anywhere else. It’s always been a competitive market, and you’ll continue to need a skilled real estate agent at your side to navigate it.
This year, be aware of these impacts on residential real estate:
In May 2022, year-over-year sales were down 14%, and inventory rose nearly 45% in southern California. This summer, homes are staying on the market longer, allowing potential buyers to shop without 2021’s level of scramble to beat out competing buyers.
Yes, it’s still a seller’s market—overall demand is greater than supply, particularly since supply chain issues continue to bedevil new construction and a wave of homeowners settled into newly refinanced mortgages.
But consumers leery of a recession have backed away from major purchases this year, including homes. For the first time ever, the majority (69%) of respondents to Gallup’s annual Economy and Personal Finance Poll said now is a bad time to buy a house.
Any homeowners who refinanced in December 2020 were treated to the all-time low 2.66% interest rate average, but many who didn’t take advantage of refinancing are now motivated to profit from the slowing seller’s market before it turns the corner.
Prices haven’t dropped but the rate of growth has significantly slowed. With fewer active buyers and longer time on the market, competing bids are no longer driving up pricing at the quick rate we’ve seen in recent years.
In southern Cali, the median price of single-family detached homes by county as of May 2022 was:
So, how are you going to make the most of these trends? It starts with an agent who understands them by your side.
If you head for a sleepy small town in the midwest and have a cousin who just got her real estate license, you’ll probably be able to find what you need.
But in Southern California, you need a skilled, networked professional who can help you find the right listings as soon as they hit the market, negotiate and advocate for you, and help shape your wishlist into the keys to your dream home.
You can interview multiple agents before committing to one. Ask about:
You can also request:
An ideal place to start is the Berkshire Hathaway HomeServices California Properties network of real estate agents. We offer assistance for any type of questions or issues surrounding the home buying industry, for example, if you’re in the process of buying a house for sale by owner, visit our resource center to make sure you familiarize yourself with this procedure. Connect with us today to find the just-right agent for you.
Unless you’re shopping with an unlimited budget, wisely selecting a new home means prioritizing your wants and needs—and understanding the difference between the two.
If you’re shopping with a partner, sit down separately and write down your preferred features, distance from work or relatives, home style, and price range. Your first home negotiation is to sit down together and compare lists to come up with absolutely need, strongly desire, and would-be-nice-to-have.
Your REALTOR® is the next person to bring into the process. They should be able to:
When identifying your price range, be sure you calculate the full monthly payment of your new home. Use a mortgage calculator and run estimates, including:
When it comes to price, location, and property features, buyers often need to consider compromises that will work for them. Partnering with the right REALTOR® is critical to bringing professional insight, fresh ideas, and opportunity awareness into these decisions.
There are a lot of questions when it comes to home features, for example, how much value does a pool add to a house, or what type of neighborhood will benefit my personal lifestyle? For more information on these aspects of real estate, make sure to read up on these topics to make sure you know what kind of house you’re looking for when entering the buyer’s market.
You may look for ways to sweeten an offer if you do end up bidding against other potential buyers, but one thing to avoid risking is a home inspection. No matter its age or apparent condition, if you buy a home with structural or other major issues, it can spin into a money pit rather than a sound investment.
Generally, you’ll have seven to 14 days once an offer is accepted to schedule your inspection.
Just as with shopping around for the best financing deal and a REALTOR® you trust, plan ahead by interviewing and checking references on a home inspector. Ask about:
A year ago, analysts were predicting a slow and minor increase in interest rates, but they escalated more than expected in 2022, returning to pre-pandemic levels and then some.
The good news is that we’re still at a relatively low-interest rate level from a historical perspective. Buyers in 2022 need to keep a close watch on short-term rate trends and predictions to make the best decision on when to lock in a mortgage rate after making an offer on a home—you’ll usually be able to choose between seven and 60 days to lock down a rate before closing.
Will the interest rate come back down anytime soon? Analysts don’t think so. The California Association of REALTORS® currently predicts a best-case scenario rate of 6.5% for 2023, with a worst-case rate of 8%.
Why act now? For some buyers, change in employment or family needs can drive a move, and you simply need to arm yourself with the knowledge to negotiate in the current market.
If you’re considering delaying a house hunt, however, you may lose out on opportunities that buyers will take advantage of this year. 2022 home buyers can:
In addition to provable income and a solid credit score, doing your homework is a key part of preparing to buy a new home. And now that you’re briefed on the 2022 state of the southern California real estate market, you’re one step closer to adding new keys to your keyring.
Take a look at the California Properties website to browse properties, learn more about the residential real estate trends, and find a top-shelf, locally connected REALTOR® to work with. We’re ready to get you into your dream home this year.
Sources: U.S. News, Money.com, LA Almanac, Freddie Mac 1, 2, Car.com 1, 2, LA Times, SoFi, California Mortgage Relief, Mortgage Calculator, Mortgage News Daily, The Mortgage Reports, Macrotrends
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August 22nd, 2022 at 11:00 am