If you’re trying to buy a home, then you’ve probably noticed that there are many other buyers out there competing for properties. Perhaps you’ve made offers on multiple homes, only to be outbid by another buyer. Maybe you’ve even decided to take a break from your home search until the supply and demand are on more equal footing. But why is demand still so high for homes in 2022? Let’s take a closer look.
Buyers want to get in on lower interest rates while they last
When the pandemic began, the federal government responded to the economic crisis by lowering interest rates. In fact, throughout the pandemic, interest rates for mortgages reached record lows. This makes for a favorable lending environment for well-qualified homebuyers. By purchasing a home when rates are low, you can potentially save thousands of dollars over the life of the loan. As Covid numbers continue to drop and restrictions are eased, interest rates are also going up. Many homebuyers are rushing to beat these increases, keeping demand high – at least for the time being.
Rents continue to rise
Another reason that buyer demand continues to remain high is that rent prices are soaring. According to a recent report, rent prices rose 14 percent in 2021. That is significantly more than the three percent they rose in 2020. With rental prices becoming less and less affordable, more people are considering buying instead. Owning a home is an investment with substantial financial benefits. When you rent, you never see those monthly payments again. But when you’re making mortgage payments, you can see a sizable return on investment when you sell.
Millennials are ready to buy
Millennials – those ages 26 to 41 – are beginning to reach peak home-buying ages. And all the recent changes in how we live in our homes have made Millennials even more eager to buy. Some Millennials will now be working from home at least part-time and may need a home that can cater to this change. Others want to buy homes to accommodate growing families. Some Millennials who put off home buying early because of student loans and other debt are now ready to enter the market. In short, those in their late 20s to early 40s are eager to finally settle down.
Some homeowners eager to upsize
Finally, it’s not just first-time homebuyers who are flooding the market. Those who already own homes want to take advantage of their newfound ability to upsize. Home values have increased dramatically in the past year, giving homeowners a boost to their equity. This increase in equity, coupled with low interest rates, means that many current homeowners can upsize. Basically, for the same monthly mortgage payments they are making now, they can buy a bigger home and make the same payments. For those who are now working from home, having bigger families, or simply want to stay home more often, upsizing is very attractive.