Anybody who’s paying attention to the housing market can tell you that property rates keep soaring. Indeed, many homeowners are seeing unprecedented gains in equity, but the situation isn’t so favorable for people who are trying to buy. If you’re one of these prospective home buyers, you might wonder, will the housing market crash 2022? More importantly, is now a good time to buy a house, or should you wait? To understand the answers to these questions, you should first understand why property prices have risen so dramatically. Read on for four reasons why housing prices continue to climb.
Interest Rates at Record Lows
Owning a home involves many different expenses. In addition to the obvious cost of a mortgage, a buyer can expect to pay for repairs and maintenance, property taxes, and home insurance. Costs such as home insurance are variable, too, so the exact cost can’t always be calculated immediately. Still, there’s one major expense that’s currently at an all-time low: interest rates. As prospective home buyers flock to take advantage of the potential savings, the competition for housing increases. This is currently one of the biggest contributing factors to high housing prices.
Rent Prices Are Going Up
Interest rates may be going down, but rent prices are going up. As people face unexpected spikes in their living expenses, the allure of home ownership beckons. The transition from renting to owning isn’t quite as smooth as many would hope, though, and some might even feel like it’s impossible. This is especially true when high rent prices prevent people from saving enough for a down payment on a home. Many people remain stuck in a rental because of this problem.
More Demand Than Supply
For those who can produce a down payment, the rush to buy is stifling. Houses aren’t just more expensive than ever. They’re also selling faster than ever. As a result, there is more demand than supply, which creates a pricing spike in and of itself. Some experts point to restrictive zoning requirements as the culprit for a housing shortage. Regardless of the cause, though, the result is the same: buying a house might be more difficult than it’s ever been before.
Home Buyer Incentives
Traditional mortgages typically require a down payment of 10% to 20%, but many programs have emerged in recent years offering down payment assistance to aspiring homeowners. Many of these programs are specifically tailored to first-time homebuyers, offering mortgages for as little as 3% to 5% down. The popularity of these programs has further added to the increased demand for homes, thus driving up prices even more. Still, they offer many benefits to prospective home buyers who may not have a typical down payment.
Cochrane & Company
For more than six decades, Cochrane & Company has been proudly at the forefront of the insurance industry. Our experience has enabled us to innovate in powerful ways, reimagining the E&S market, and providing technology solutions that make it easy to do business with us. Licensed in all 50 states, we proudly serve clients across the nation, providing personalized and powerful solutions to help you become an even better partner for your clients. Speak to one of our experienced professionals today by calling (855) 967-0069.