Is now the right time to be a buyer?

The bidding wars and rising housing prices that defined the 2021 market forced frustrated buyers to the sidelines with hopes that the 2022 market would cool. Unfortunately for those buyers, the new year hasn’t brought lower pricing. According to industry experts, the seller’s market is here to stay.

“The 2022 housing market is skewed heavily in favor of sellers — and it’s likely to stay that way for most of the year,” said Nik Shah, CEO at Home.LLC. “There just aren’t enough homes for sale in the housing market, and this number is getting lower with every passing day. Inventory of existing homes for sale dropped almost 20% in December. As long as this trend continues, home prices will keep going up, while affordability will continue to worsen.”

The December numbers cited by Shah represents the lowest inventory on record according to the National Association of Realtors. Prices skyrocketed nearly 19% last year and while they may not continue to rise at that pace in 2022, prices continue to rise.

As prices soar to record highs, the largest living adult generation is reaching peak home-buying age. No matter the economy, millennial buyers will impact the housing market for the entire decade to come.

“Millennials are entering their early thirties — the prime first-time homebuyer age — in large numbers,” Shah said. “They will continue to exert upward pressure on home prices well into the mid-2020s.”

Millennial buyer demand along with low inventory are keeping prices high but so is a decade of slow new construction. However it seems those tides can partially turn.

“There are close to a million housing units that are currently authorized for construction or under construction,” Shah said. “They have been delayed due to persistent supply-chain issues. When these homes are completed in the second half of 2022, there’s an expectation that they will add to inventory and skew the market in favor of buyers.”

He cautions that it’s an optimistic view of the data. “That’s because many of these homes have already been sold,” he said. “For example, just 25% of new homes sold in December 2021 were completed homes. 46% were still under construction, while work had yet to start on 29% of homes.”

While it may not be the perfect time to buy, it’s still as good a time as any. Prices are rising and they will continue to rise but so does inflation while home values appreciate. Even if the market cools soon, it’s unlikely that prices are going to drop. It’s more likely that they will just rise by less. Right now is cheaper than later. It’s a seller’s market and that only results in increased prices, thus reducing a potential home-buyers ability to purchase in the future. If you can afford to purchase now, then now is the right time to buy.