While the 2021 housing market was booming, it wasn’t a walk in the park for most buyers. 66% of Americans who began the year with intentions to buy weren’t successful according to NerdWallet’s 2022 Home Buyer Report. With 26 million planning to buy a home this year, the lessons from the failed 2021 attempts may help guide this year’s shoppers.
Low inventory and high demand have made the market competitive. About 25% of Americans who planned to buy a home in 2021 said they made at least one offer on a home that didn’t end in an accepted offer. A competitive offer is one of the best ways to ensure going under contract. While having the highest offer does help, it’s also a good idea to make it simple and convenient for the seller. Demonstrating your ability to pay with a preapproval, willingness to have a speedy closing, and offering to buy the home as-is after it’s inspected can all help putting your name at the top of the pile without taking on unnecessary risks.
Being flexible may work in your favor because available homes may not be perfect homes. Many of the unsuccessful buyers of 2021 say they held off because a home didn’t meet all their needs. One suggestion as you begin shopping is to make a list of all the features you’d like in a home and then cross off those that aren’t deal breakers. The more you can compromise on, the more likely you’re able to land a home.
Buying in 2022 is likely not to be much different. Nearly one-fourth of failed buyers in 2021 say they held off buying because think it will be easier in 2022. The rate of growing prices may level off at some point this year, but prices aren’t likely to drop down drastically. The likeliness of dramatic change in the housing inventory is slim as well. According to the same NerdWallet survey, 89% say concerns about being able to find or afford a new home is holding them back. Having realistic expectations can help cushion you from disappointment and help you plan to beat out other buyers.
While it may be tempting to borrow more to land that perfect home, don’t burst your budget to get under contract. About 24% of last year’s buyers said they walked away because they couldn’t afford anything on the market. Be smart when setting up your budget and stick to it. Finding yourself “house poor†because you stretched yourself thin can lead to sleepless nights and regret. Using a home affordability calculator can help point you in the right direction.
Buying a home is generally a long-term goal and it can take some time to get your credit and income at mortgage-ready levels. 16% of home shoppers in 2021 cited not being able to qualify for a mortgage. Aiming for a credit history that shows on-time payments, manageable debt and a down payment can make your application more attractive to lenders.
You can read the full report here.
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