Should I buy a house in 2022? Or Should I wait? In this video karan explains what factors are impacting the decisions of home buyers in this ever changing market. The current market, where the rates and rents are rising at an uncomfortable speed. He sheds light on historical decision points of buyers: comparing the housing market now to the housing market during COVID when rates were at record lows. Your buying decision has both logic and emotion mixed into it and Karan shares his views on what those emotion and logical points are for the current buyer.
If you are a buyer looking to buy a home for your family and no longer want to pay rent then this one’s for you. Tune in to see and hear what Karan has to say about the interesting and transitory times we are living in now.
Video Transcription:
In today’s video, I will be answering a gazillion dollar question that everyone wants to know, should I buy a house in 2022? Should I buy a house now or should I wait? So let’s get started. Before I jump right in, let’s go to the board real quick and look at what’s happening in the market right now and what was happening in the market before now. All right, so let’s look at what was happening before. During COVID times, we had really low interest rates, 2.5, 3%, some people even locked in at 1.75% on a 10-year fix. So we had ridiculously low rates. Number two, we had this new work-from-home environment that was foreign to a lot of us because a lot of companies had said work from home. So lifestyle was a big, big change during the COVID times. So people that were working from home preferred to have a comfortable environment where they can work for them. They needed more space. Number three, we had high paying jobs, a lot of cash in the economy, the stock market was booming, there was stimulus checks coming in from the government. Number four, which happens, everyone wanted to jump on the wagon. We had high, high demand because of all these things happening. And your mom was buying a house, your uncle was buying a house, your friend was buying a house. Well, I wanna buy a house too. So everybody was jumping on the wagon. Number five, we had high rents. All of this caused the home prices to go up. Now we have really high interest rates. If you watched my last video that I did last week, I tell you where the average rates on a conventional mortgage right now are touching 7%. Now you still have a work-from-home environment, more of a hybrid model now. A lot of companies are allowing three to four days work from home. Some companies are still allowing work from home. So you still have that work-from-home environment available right now. Number three, you have still a very low unemployment rate, very low, historically speaking. Less cash in the economy with the rates going up, lending getting a little bit stricter, less money available to buyers. So that’s the little change there compared to what was happening before. Number four, now you have people jumping off the wagon. Instead of jumping on, a lot of people are jumping off. Some people are just outright priced out because the rates are very high and the numbers are not making sense. Your DTI is too high, the lender can’t do your loan. So that’s happening. But a lot of people are jumping off because they’re seeing other people jump off because we have herd mentality, like always. And anything that you buy, you’re always gonna have logic and emotion and mixed up. As if you see these pointers on the board, there’s logic and then there’s emotion. And that’s happening right now. People are thinking, but the emotion is stopping them because other people are also not buying right now. And number five, you still have high rents. So now let’s look at what the constants are, the comparisons are between these two times when people were buying homes. You still have high rents, unemployment, it’s still very, very low, and home prices are still high. Despite the rates going up, the home prices have not really dropped. Depending on what market you’re in, there may have been 5% to 7% drops in prices from the list price to what the house sells for. But we have not seen distressed sales where the property’s listed at, say, 700,000 and it’s selling for 500,000. That’s not happening anywhere in the market right now. We’re seeing price negotiations happening, but not significant price drops. If you haven’t checked out my video, check out the video, click the link above. It tells you about how the rates are impacting home prices right now in your local market. Thank you for watching this video. I make this content for you. If you are not liking something or liking something or loving something, please let me know by leaving a comment below, hitting that Like button. And thank you, thank you, thank you so much for watching and following me. Now, to answer the question, should I buy a home now? But let’s break this down. I know there’s further questions beneath this question. If I buy a home now and not wait, am I losing on a deal if home prices drop next year or the following year? Let’s answer that first. So, first of all, nobody exactly really knows what’s gonna happen next year because we have this variable in the air, which the rates may continue to rise up, inflation may continue to go up still, and the feds may keep raising the rates. And if the feds keep doing that, the prices may start to drop. A lot of experts are expecting the prices to drop maybe 5 to 10% because they’re still constant demand there. Now, what happens if the rates don’t drop drastically and start to come down slowly if we get a grip on the inflation, which we may soon as consumer spending has gone down? Well, then you’ll start to see buyers surface back in the market that have put breaks on their buying decisions and you’ll start to see an increase in competition. So there are a lot of variables there, and no one really can answer that question but you. This is a lifestyle decision, and what I would recommend is look at your local demographic market where you stay, and also look at the neighboring areas around you. Even look out of state and see other options that are available. If you run your numbers, you run the math and your mortgage payment with everything included is the same as rent, or in some cases lower, then you know it’s a no brainer. Now, if the home prices drop and you bought a house now, well, do your math now, because if the home prices drop, your mortgage is not gonna change. You’re buying a lifestyle. Even if they were to drop, you’re gonna stay in this house for 7 to 10 years. And if your mortgage payment is locked and it’s not changing, you’re gonna ride the wave right back up like you saw historically in in the past years. When markets drop, they come right back up. So if you’re comfortable with that mortgage payment and it’s locked in for a 30-year or a 15-year mortgage, you have nothing to worry about in the sense of if the home prices were to drop. Now, emotionally speaking, it may bother you a little bit and it might tickle your ego that I was not able to buy a a home. I could have waited and bought a deal, but nobody really knows what’s gonna happen. So you have to ask yourself that question, is that mortgage payment that you’re gonna get, is it same as the rent? Is it lower than the rent? Is it depleting your cash flow by a lot? Are you able to have savings after this? And if the question to those answers is yes or no depending on where you are and you feel comfortable buying a home, then absolutely buy a home because you will make equity on the long run as opposed to paying someone else’s mortgage. And like I mentioned, do some research. There are a lot of states out there that have very low property taxes. Arizona’s one of them. Oregon is up there, Colorado’s up there. I know if you’re living in a beautiful area like the Bay Area and California, it’s really hard to move out. But this is a decision that you have to make for yourself and your family. And run some numbers. So the first thing that I would focus on right now is figure out what your mortgage payments gonna be on the house that you’re trying to buy, and can you afford that home? And what are the local surrounding areas around you that you can move to that have a mortgage payment and a comfortable lifestyle that you can afford and see yourself living in? So do some research there. And the main thing is, after you do the research, you want to make a decision because that decision is gonna allow you to give you that conviction and confidence, and that’s how you’re gonna really gonna be able to manifest a good deal. Because if you’re undecisive, you’re always gonna be left in the dust. So make a decision for yourself. And know, if the numbers are not working for you right now, it’s absolutely okay. It’s inflation time right now. There’s a lot of things, cost of goods have gone up. So you want to save money and you really want to know what the numbers look like. So if I didn’t answer some of your questions, if there’s things in there that I was not able to address, please leave me a comment below. I will do my best to reply to you. Once again, thank you for watching. This is Karan Singh with Optimal Homes. Until next time.
