Waiting Until 2022 to Buy a House: Will It Help or Hurt?

Looking into 2022 concept

“Should I wait until 2022 to buy a house?”

Based on the emails we receive, this is a common question among home buyers across the U.S. And ultimately, it’s a question you have to answer for yourself. Your financial situation and long-term plans will help you determine whether you should buy a house now or wait until 2022.

From a market standpoint, there are some potential pros and cons to consider. The upside is you might encounter less competition if you wait, while having more homes to choose from. On the other hand, you could pay a higher price if you wait until 2022 to buy a house.

Decisions, decisions.

Waiting for 2022 to Buy a House: Possible Upsides

Based on current trends within the housing market, there could be some advantages to waiting until next year to make a purchase. Here are four reasons you might want to wait until 2022 to buy a house.

1. You might have more houses to choose from next year.

The ongoing inventory shortage has been one of the biggest housing market stories of the past year. All across the U.S., home buyers are struggling to find houses to purchase due to record-low inventory levels. Granted, some cities are worse off than others when it comes to housing supply. But it is definitely a nationwide problem.

According to recent reports, however, we might see more homes coming onto the market later this year and into 2022.

There have been some early signs of this already. A June 2021 report from Zillow showed that for-sale inventory nationwide rose by nearly 4% from April to May of this year. That was the first monthly increase in housing market inventory since July 2020. According to Zillow, the number of homes for sale rose in 43 of the 50 largest metro areas across the U.S.

Additionally, recent surveys have indicated that a higher number of homeowners are planning to list their homes for sale in the near future. This is partly due to the ongoing vaccine rollout, among other factors. The short version is that homeowners appears to be more willing to list their homes for sale today, compared to a year ago.

If these trends continue, home buyers who wait until 2022 to buy a house might have more properties to choose from. And that’s a pretty big deal, when you consider the tight inventory conditions we’ve been dealing with for months.

2. You might encounter less competition from other buyers.

Housing market activity over the past year can be summed up in a single word. Frenzy.

We have seen a tremendous increase in home-buying activity all across the country, despite the pandemic. In fact, the coronavirus pandemic gave the real estate market a huge boost by encouraging relocation and home purchases.

But there are some signs that the real estate market is cooling down a bit. This is another factor that could affect those who wait until 2022 to buy a house.

According to a recent report from the National Association of Realtors, home sales in the U.S. declined for the fourth straight month in May 2021. The company’s analysts attribute this to high prices and “frustrated potential buyers.”

In cities across the country, home buyer fatigue appears to be setting in. According to Jeff Tucker, senior economist at Zillow:

“This is a really challenging time to be a buyer. The market is as hot as we’ve ever seen it before. If they can watch and wait for the next several months, time is on their side.”

These and other factors could ease the level of competition among buyers, as we finish out this year and move into next. Those who wait until 2022 to buy a house might have an easier go of it.

3. You might not have to overpay to get a home.

As we explained in a recent report, a lot of home buyers nationwide have been overpaying for houses in recent months. This is due to the stiff competition mentioned earlier.

Tight supply conditions and strong demand have forced home buyers into an increasingly competitive situation. This kind of scenario often leads to offers above the asking price, and other acts of desperation.

But the way things are going, we could see less of this in 2022. Steadily rising prices will continue to reduce the number of buyers who can afford to make a purchase. There’s also a chance that professional investors will begin to pull back from the market next year, if they get a sense that things are cooling down.

Those who wait until 2022 to buy a house might discover that they’re able to make a more reasonable offer, instead of overbidding.

Related: Is the housing market overvalued?

4. Mortgage rates might not rise very much by next year.

Mortgage rates are another important consideration for those who are trying to decide between buying now or in 2022. It’s a valid concern. After all, a substantial increase in rates could reduce your buying power and increase your long-term costs.

But industry analysts don’t expect mortgage rates to rise substantially anytime soon. In fact, a pair of recent forecasts suggested that 30-year mortgage rates could hover below 4% well into 2022.

In April of this year, the research team from Freddie Mac issued a long-term mortgage rate forecast extending through 2022. They expect the average rate for a 30-year fixed mortgage loan to remain below 4% for all of next year (as of their most recent projection).

The Mortgage Bankers Association issued a similar forecast that predicted only a gradual rise in rates. In its June 2021 forecast, MBA’s analysts predicted that 30-year mortgage rates would average below 4% through the first half of 2022. Beyond that, they projected that rates could rise to around 4.2% by the end of next year.

Both of these forecasts suggest that mortgage rates could increase slightly over the coming months. But neither group expects to see a major increase anytime soon.

If these forecasts prove accurate — or even close — home buyers who wait until 2022 to buy a house could encounter slightly higher borrowing costs. Even so, mortgage rates are expected to remain relatively low for the foreseeable future. So there doesn’t appear to be very much urgency on this front.

One Major Downside: Higher Home Prices Likely

Those are some of the ways a person might benefit by waiting until 2022 to purchase a home. But there could be some major downsides as well. If house prices continue to climb the way they have in recent months, buyers who postpone their purchases until next year could end up paying more.

Home prices have risen steadily and significantly over the past 12 to 18 months. This is true for most cities across the country, with a few exceptions. Most forecasters predict a continuation of this trend going forward.

In June, for instance, the real estate data company Zillow stated:

“United States home values have gone up 13.2% over the past year and Zillow predicts they will rise 14.9% in the next year.”

This could be the biggest disadvantage of waiting until 2022 to buy a house. Granted, we are getting into the weeds of speculation and forecasting. Nobody knows for certain what the real estate market will do between now and 2022. But based on current trends, it seems likely that home prices across the U.S. will continue to climb steadily into next year.

Disclaimer: This article includes forecasts and predictions relating to the housing market. Future outlooks are the equivalent of an educated guess and should be treated as such. The Home Buying Institute makes no claims or assertions about future housing conditions.