First Time Home Buyers Guide 2022

In the current housing market, purchasers still confront several difficult obstacles, including high property prices, high mortgage rates, and a scarcity of available properties.

However, the ferocious housing market rivalry of recent years has somewhat subsided. Buyers have greater freedom to bargain because there are fewer bidding battles.

Here are some current developments and market navigation tips for the second half of 2022.

In recent years, a shortage of properties has been spurred by a rivalry among purchasers. But when summer got going, the supply got better.

According to the National Association of Realtors, there were 9.6% more homes for sale nationwide in June than the previous month, bringing the supply to three months as opposed to 2.6 months in May and 2.5 months in June 2021. A three-month supply indicates that, at the current sales rate, it would take three months to sell every home.

In a typical market, there is a five- to six-month supply of homes, according to Todd Luong of RE/MAX DFW Associates in the Dallas-Fort Worth region. Said via email. Still, with the growing inventory, buyers have more choices than they did earlier this year.

It is predicted that the second half of the year will see rates remain at or near that level according to Fannie Mae, Freddie Mac, the Mortgage Bankers Association, and the National Association of Realtors.

According to rates provided to NerdWallet by Zillow, mortgage rates started to rise in January, with the 30-year fixed rate averaging 5.5% in July, or nearly 2.5 percentage points more than at the start of the year.

In the first half of the year, however, housing prices increased significantly year over year. According to the NAR, the national median price for existing homes sold in the second quarter was $406,600, up 14% from a year ago, and it reached a record high of $416,000 in June. 

In the second half of the year, the NAR predicts that the median price of existing homes would decline by a quarter, to $402,400 in the third quarter and $380,900 in the fourth. In the fall, prices typically decline from those during the busiest spring and summer months for home sales.

According to the NAR’s August economic outlook, prices will still be higher year over year, but the pace of those price increases will moderate to 11.7% in the third quarter and 6.5% in the fourth.

According to Christian Ross, a real estate broker at Engel & Volkers Atlanta, “the past two years, people would purchase anything.”

For homes that have been updated and are ready to move into, competition is still fierce, but less so for homes that require repair.

She gave purchasers advice at the start of the year to anticipate that they could have to submit 10 or more offers before having one accepted.

According to her, purchasers are now successful with two to five offers and have the option to ask for concessions. Although there is still not enough inventory, the higher mortgage rates have reduced competitiveness.

Here’s how to get ready and compete in the market this fall given the market circumstances.

Look around for lenders and obtain a mortgage preapproval.
Kevin Parker, vice president of field mortgage originations at Navy Federal Credit Union, says, “We always advocate getting in touch with a lender as soon as possible, not just to apply but to understand… the process.”

The type of mortgage and lender both have different lending standards. For some mortgages, the down payment required might be as little as 0%. Making a larger down payment, however, provides a few benefits. Because there is a decreased chance of default when a borrower contributes more to the acquisition, lenders might offer cheaper rates. Additionally, a large down payment may boost the likelihood that an offer will be approved by giving sellers assurance that your financing will close.

Ask lenders for an estimate of closing costs before comparing rates and fees, Parker advises.

Apply for a mortgage preapproval once your finances are in order and before you begin looking at properties. An offer from a lender to lend you money up front and on particular terms is known as a preapproval. Before showing you houses, real estate brokers will need you to be preapproved.

To get the best offer, submit an application to various lenders and compare loan estimates. Lenders must give applicants a standard form known as a loan estimate. In the form, loan costs are broken down into interest rate, monthly payment, and closing costs.

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