Housing Market Reality


Last year was a volatile time for real estate. Due in part to the COVID-19 pandemic, we had one of the most competitive housing markets in recent history. The housing market dictates whether it’s smart to buy a pre-existing house, build a home, or rent. Before you make your decision, it becomes important to look at mortgage interest rates, home prices, rent prices, and the costs to build a custom home. Here are the latest predictions and housing market realities so that you can make the best decision according to your goals and budget.


Mortgage Rates


Home mortgage rates are predicted to rise throughout the year 2022 but will eventually level out. Compare this with last year when experts predicted that the average interest rates would surpass 3%. They did in fact go beyond that mark but not by much. 2021 mortgage rates stopped at around 3.1% to 3.3%. If only they would stay around that level, which is not likely this year.


As we head further into 2022, we might see fixed-rate mortgages reach as high as 5.51% and higher, especially if the Federal Reserve keeps up with the continuing rate hikes.

Some analysts do predict the rate to fall back to 4.6%, such as those at the National Association of Realtors (NAR). This is excellent news for home buyers and future home builders who are worried about increasing home prices and rates.


While you’re waiting for interest rates to level out and fall, start putting effort into improving your credit score. Having the highest score possible will help you secure the lowest rates possible for a home loan. What credit score do you need? Most lenders prefer you to have a credit score between 500 and 620 for approval, but the higher your score, the lower your interest rate is sure to be.


If you’re ready to buy now, and don’t want to wait for interest rates to fall, feel free. You can always refinance your loan later once your score has improved and interest rates have fallen.


Home Prices


Home sales are on the rise thanks to low mortgage rates, the work-from-home trend, and supply shortages. These elements have encouraged home sales, which has caused prices to rise.


Will Housing Inventory Remain Low?


A major concern of homebuyers is whether the housing inventory will meet buyer demand. Not only does a low inventory cause rising prices, but it makes it difficult for homebuyers to find a home they want and can afford.


New construction has resumed post-pandemic, which is good news for homebuyers and those looking to buy a custom-built home. The unwelcome news is that housing materials have increased in cost, largely due to supply chain shortages and delays.


Remote Work Trends


Another factor that is driving higher real estate costs is the continued interest in work-from-home trends. It is no longer necessary to live near the city to find a decent job. Therefore, more homeowners are looking to settle in suburbs, which is constricting home inventory.

Because home prices and home construction costs are rising, buyers need to be sure they can afford the home they hope to buy (or build). Prospective buyers would be smart to use mortgage calculators to determine their future home’s affordability and to potentially save for a down payment.


You might also want to anticipate a bidding war when it comes to buying a pre-existing home. While bidding wars have decreased from last year, it’s a good possibility that you may have other bidders to contend with when you set your sights on the home you want. To set yourself apart from other buyers, strive to get a verified approval letter before putting in your bid. This added confirmation could appeal to the sellers who are interested in expediting the sale of their homes.


Home Value


You may be thinking that home value is the same as home price. The truth is that home value refers to the amount a professional appraiser has given to a particular home. Home values have increased this year because of the bidding wars of last year. Home buyers were more than happy to pay more than the amounts homeowners were asking for.

Because of this phenomenon, make sure you are not overpaying for a prospective home by getting a professional appraisal. Keep in mind that if the appraiser deems that the property’s value is too low, that could mean the offer amount is too high. You could then end up with negative equity after closing the sale.


Should You Buy or Build a Home Now or Wait?


Buying a pre-existing house or building a custom home in any market is a decision only you can make. Buying a home is the largest purchase any one person can make. Therefore, it is important to be financially secure before making this all-important decision.


You should know how much your monthly housing costs will be based on mortgage calculators, your down payment, and the current mortgage interest rates.


What you shouldn’t do is try to predict what might occur with housing market trends from month to month and year to year. It is far better to buy or build according to your needs and budget. If you find a home you love or find a builder who constructs in a community you appreciate, and your budget can withstand the purchase, the chances are high that the decision you make could be right for you. On the other hand, if you sacrifice too much to secure the house of your dreams, you could end up with buyer’s remorse and an expensive white elephant you suddenly need to offload.


What is the Outlook for Millennial Buyers?


Millennials are at the peak age to buy their first home. Because of home shortages, these buyers are likely to be at a disadvantage compared to older generations. This is due to the fact that home prices are more expensive and older generations are staying in their homes longer. As a result, first-time homebuyers will likely need financial help from family and friends to make their initial down payments. That will, in turn, limit who can purchase a house.


How to Buy in the Current Housing Market


According to the latest predictions, pre-existing home inventory will likely remain tight. Still, if you are looking for a house or expecting to build this year, determine a budget and stick with it. Even though home construction has resumed, which means a slight uptick in the number of homes for sale, you could still face steep pricing and rising mortgage rates. Listen to your gut. If the purchase feels wrong, the best move is to wait.


Buying or building a home is not the time to make a fast decision. Don’t come into the market with a scarcity mentality or you could have buyer’s remorse by the time everything is said and done. You can’t return a home you overpaid for or that you did not like. Be patient and only buy or build if your personal finances and long-term economic stability say it’s a promising idea.


Are You Looking to Sell Your Home This Year?


The first step to successfully selling a home is to find a listing agent who knows the area and comes with excellent recommendations. A solid agent will help you price your home competitively. The agent will also find buyers and field their questions.

You can help the process by presenting your home in the best possible light. Assume that potential buyers lack the cash for repairs and renovations. You don’t have to give the home a complete makeover, but do try to make sure it’s organized, clean, and decluttered. Add bright lighting throughout the home to make it appear more livable.


Even if your home is older, offering a clean, well-lit space gives potential buyers a chance to envision the new home’s true potential.


Why Not Build in the Current Housing Market?


With high buyer demand and low home inventory, it has never been a better time to build your own custom home. With a custom-built home, you get to choose all the elements that can convert a new construction into your dream home. From the exterior, such as the housing materials, front doors, landscaping, garage, and outdoor space, to the interior design, such as spacious showers, countertops, flooring, cabinetry, kitchen appliances, and a whole lot more, you are sure to have an exciting time making your perfect home a reality.


Instead of fighting over the pre-existing inventory, you get to choose a Cincinnati community that fits your family’s ideals. You can then choose a spacious floorplan and all the home design elements that fit within your budget.


Start the process now by contacting Ashford Homes in Cincinnati, Ohio. Our home construction design team is standing by to talk to you. We can discuss your budget, mortgage rates, the home build process, and how to go from that process to breaking ground and turning over the keys. Call us at 513-442-5555.

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