With the busy summer season starting to wind down, some buyers are asking if they should continue their home search or wait until 2023.

This is an easy question to answer. If you can afford to buy a home, do it now.

It’s important to note that there’s never a bad time to invest in real estate. Even homeowners who bought right before the Great Recession in 2007, and saw their home values plummet, came out ahead as long as they held onto the property until the values rebounded.

But the general rule is that the best time to buy is al ways five years ago, and the second best time to buy is always today.

And we have five compelling reasons why you should buy a home before the end of 2022 instead of waiting until 2023.

1. Rents are Increasing

Cities like San Francisco may offer some protection from increasing rents for renters. But even with the rent control measures in place, rents are increasing quickly. Two-bedroom rents are currently averaging $4,200 per month, up from $3,800 a year ago.

But when you buy a home with a fixed interest rate, your housing costs remain fairly consistent. You might see small increases for items like property taxes (which are capped in California) and homeowner’s insurance premiums. But your principal loan payment and interest amount won’t increase.

2. Prices are Still Climbing in Most Markets

Home values are still going up across most of the country, albeit at a slower rate than we’ve seen over the past two years. The median American home price in August 2022 was up 11% year-over-year.

This means waiting to buy a home is likely to cost you more money than buying today would.

3. Experts Agree There isn’t a Crash Coming

Some buyers have been waiting for the market to “crash” so that home values will come back down to the pre-pandemic prices. But there is no indication that a crash is coming.

Unlike the housing bubble of 2006, which was fueled by irresponsible lending practices, our current value increases are the result of legitimate supply and demand. This means that there is no bubble to burst.

It is possible that some markets could see a temporary dip in home values at some point in the next few years. But it’s more likely that we’ll see values growing at a slow, sustainable pace.

4. Mortgage Interest Rates Will Continue to Increase

Interest rates are expected to continue increasing to combat today’s high inflation rates. This means that homebuyers in 2023 could pay more than today’s homebuyers even if home prices dip.

For example, a $1,000,000 home with a 3% down payment and a 5.1% interest rate would cost about $5,266 per month in principle and interest. If the price drops to $975,000, but the interest rate increases to 5.5%, your monthly payment actually goes up to $5,370!

It’s better to lock in today’s rate. Then, if rates do come down a few years from now, you can refinance to the lower rate.

5. Home Loan Assistance is Available

Conventional home loans might be the most common loan type, but they aren’t your only option. Government-backed loans can come with more favorable terms, depending on your circumstances.

FHA loans are specifically designed for buyers with lower credit scores.
VA loans offer a 0% down payment option for military service members, veterans, and surviving spouses.
USDA loans offer a 0% down payment option for low-to-medium income borrowers looking to purchase a home in a rural area or small town.

There are also grants and assistance programs available by state, particularly for first-time buyers. But there is no guarantee that these programs will be around in the future. Mortgage financing is always changing, so it’s smart to lock in good terms while they’re available.

How to Start the Buying Process

Are you ready to buy a home in 2022? The experts here at Sequoia Real Estate are excited to help you! The process starts with a free buyer’s consultation. Our buyer’s specialists will go over your needs and help you get pre-approved for a home loan with a reputable lender.

We’ll search for properties that meet your needs, combing through the listings on the market and following up on potential off-market opportunities. And when you find the right home, we’ll negotiate aggressively on your behalf to get you the best possible price and the best possible terms.