Even though it requires some cash upfront in the form of a down payment, forecasters predict the benefits of buying a first home will outweigh renting in 2022.
Mortgage rates and home prices will continue to rise and inventory will continue to be an issue, but remote work opportunities will allow young buyers to expand their search areas to find that perfect first home, according to a recent study from Realtor.com.
How will housing price increases impact the rental market?
Home prices are expected to increase by 2.9 percent and mortgage rates by 3.6 percent while rent will outpace both with a 7.1 percent increase. In 2021, the rental vacancy rate neared historic lows. With limited supply and greater demand, the cost of rent will continue to rise in 2022.
Buying that first home won’t be without obstacles, but the 2022 housing market benefits of buying are expected to outweigh the plusses of continuing to rent.
4 Reasons to Buy a Home
- Equity: Owning your own home is an investment and a way to build wealth over time. The average homeowner’s net worth in 2019 was $255,000, while the net worth of a renter was only $6,300, according to the Federal Reserve Board’s triennial Survey of Consumer Finances.
- Flexibility: Do you want to replace all the fixtures, upgrade the kitchen, or paint the bedroom? Homeownership allows you to put your personal flair on a home. You can make it uniquely yours without worrying about what the landlord might say.
- Tax Benefits: Homeownership often offers incentives during tax time. Whether it’s deducting interest payments on a mortgage or annual real estate taxes, first-time homebuyer credits, and even home office expense deductions, there are an array of potential tax benefits for the homeowner. Wyndham Capital does not offer tax advice, so we suggest you consult a tax adviser for additional information.
- Consistent Monthly Payments: With a fixed-rate mortgage, monthly principal and interest payments remain the same over the course of a loan term. Rent is more unpredictable than a mortgage and is likely to increase.
Prepare for What’s Ahead
There’s a lot for potential homeowners to look forward to in 2022, especially a bump in inventory, albeit a small one at 0.3 percent. However, the housing market will remain competitive. The good news is a competitive labor market could offset some of the rising costs.
If you’re planning to buy your first home in 2022, make sure you find out about all the perks available to first-time home buyers. Contact a Wyndham Capital Mortgage Consultant to get your questions answered.