A house to call your own, with a picket fence – that is the ultimate dream for many Americans.
Whether you wish to put this house up for rent or live in it is a different matter. However, lately, it seems it is getting harder and harder to achieve this dream. The pandemic, recession, and global crash in the economy have made it impossible for people to own houses.
However, these changes are recent, and house prices have been rising for some time now. Of course, one of the reasons is demand and supply in the real estate industry. Regardless, the fact remains that home prices are rising and all we can do is wait for rates to go down. But, for how long?
Continue reading to find out some reasons why home prices are rising.
1. Lower Interest Rates
Interest rates only started increasingly recently. Before this surge, interest rates were low, which meant more people were interested in buying new homes. When demand for homes increased, so did the prices.
Of course, this is natural, but the only solution the real estate industry provides for the problem is to build more houses. However, this is not an efficient solution because they base it on less supply of homes which is not the case.
2. Increase in Local Zoning Regulations
Local zoning regulations have gone through multiple amendments in the past. Home prices rise because of changes in the laws as well, for instance, changes in neighborhood limits and population density. So, if housing prices are high in certain areas or neighborhoods, it could be because of the regulations.
3. Increased Building Cost
Building costs have increased drastically. This is because of the high cost of materials which is a result of the global economic crisis. Due to changes in import fees and material costs, building a house is much more expensive. Of course, every country has different regulations, and the political relationship with these countries can also affect the prices of materials we need to import.
4. Demographic Change Boosted the Demand
People wonder why suddenly there is a higher demand for homes. You see, several years ago, Millennials did not have the financial power to purchase a home. Now home prices are rising because a demographic change is happening, and more Americans are interested in buying houses.
5. Land Price Augmentation
There is no shortage of land in America. However, the rapid increase in population has increased the land price. Since the land is more costly to purchase today, house prices are rising because they are directly linked to each other.
6. The Pandemic
Absolutely no one could have predicted the nightmare that the pandemic brought upon the whole world. In mere weeks the whole world shut down without any hopes for things getting better soon. Economies crashed, fuel prices soared, and among all of this, the demand for homes increased as people moved to work from home for an indefinite period of time.
It took some time for us to get things back to normal or, as they say, the new normal. Still, things haven’t fully adjusted. We are still not Corona free, and the effects on the global economy are long and lingering.
Of course, this is one of the major reasons for higher mortgage rates.
Now, with demand high and supply low, a question on every buyer’s mind is: Should we buy a house in the current economic climate or not?
Here is the answer.
Yes, you should definitely look out for a new home in 2022. Even though house prices are rising,
Of course, not all applications are approved when so many people are applying for mortgages. Here is how you can improve your chances of purchasing a home in 2022:
- Get preapproved for a mortgage – Getting preapproved shows sellers that you are serious about buying a house. In addition to this, when you are preapproved, you can make early offers on houses that you like on the market.
- Go Steady with Your Job – Unless you have a better job offer in your pocket, it is best to avoid a sudden change in jobs. Lenders prefer to approve loans that display a regular flow of income. Any major change might put you under scrutiny and lead to rejection.
- Try Buying in Off-Season – The off-season for home buying is winter. During this time, home prices are likely to go down. Hence, it is better to shop for your new home in the off-season because there will be fewer buyers, and you might just catch a solid lead for your dream home.
- Make Your Best Offer – Sometimes, people lose the perfect house because they quoted an unrealistic offer. Remember, the seller wants you to have the product, but only at the right price.
Of course, you must be vigilant and stay under your budget. However, if a house looks like it has the potential to be your future home, don’t hesitate to make a reasonable offer.
- Get in Touch with an Experienced Realtor – The pandemic gave realtors an opportunity to learn much more about the real estate industry and certain areas. For instance, buyers are more particular about hospitals and emergency services available in an area after the pandemic.
A realtor can help you determine your needs and guide you in making the right offer. They understand the market and have experience with different types of clients, which will ensure you land the house you desire.
Conclusion
House prices are rising, but that doesn’t mean you can make an effort to find a good house for yourself. Your home is your sanctuary, and finding your dream home is on everyone’s wish list.
However, to make your dream come true, it is essential to keep an eye on those interest rates. In addition to this, rising prices shouldn’t discourage you from searching for a house. Remember, dreams are achieved when you try your hardest.
You must apply for a preapproved mortgage to spend some time looking for that perfect house. When you do find it, you can make an offer ASAP and start building a beautiful new life in your home.
