Buying a Home in 2022. Is it a Good Idea?

“So today we’re going to talk about, is it a good time to buy a house in 2022? And I’m gonna tell you right off the bat, it’s a very subjective answer, there is no one size fits all for everybody. I’m gonna talk about the pros and cons. And we’re going to look at the math that will help you guide your decision. So the math that I’m going to show you is the Denver market stats that I’ve compiled. I’m in the Denver market, I live and work here. So these aren’t national stats, this is here in Denver, Colorado, and we are an extremely hot market. But let’s look at historically. In 2012, the median home price was $200,000. From $200,000 until now, the median home price is $530,000. So we’ve had some crazy appreciation. And logic would tell you if you just look at this, that we are due for a crash. And I would initially agree with you. But if you zoom out and look at some of the bigger math, I’m not so sure. Let’s look at the supply and demand issues that we’re having here in Denver right now. The normal absorption rate for a healthy market is six months. So any inventory on the market would be absorbed by the demand within six months. In Denver right now, our absorption rate in July was point six months. So in half a month, all the inventory on the market was gone. We have such a housing shortage in Denver, we can’t build them quick enough to keep up with the demand that there is just not enough inventory to meet the demand of people that want to buy. So I feel like this number is going to go up in 2022. I don’t know if it will go up at the 15 and 18% appreciation that we’ve seen the last couple of years. But there just isn’t enough houses to meet the demand. So I think this number will keep going up. A lot of what is happening, rents are also going up. Rents almost went up 10% in 2021. These people that couldn’t find a home because there’s not enough houses on the market, they dove into the rental market, which pushed rents up. So either way, whether you’re renting or buying, both expenses are going up. What I like about buying in 2022 is rates are still low, you are fixing in your biggest cost on most people’s monthly income statement is your rent or mortgage. So when you buy, you lock in a rate so that payment can never change. So we’re seeing inflation go up all around us, consumer goods are going up, you go to the grocery store, the things you’re buying this year are way more expensive than last year. You go to Home Depot, anything you buy, there is way more expensive than last year. So at least you’re locking in your one biggest expense on a monthly basis. So I would say, big picture buying in 2022, with the appreciation that I think we’re going to see, I think those are the pros. Let’s look at the cons. I said it’s not a one size fit all. If you are uncertain on timing, and you’re not going to hold the house for at least a couple years, it is expensive to get in and out of a house. I don’t think it makes sense for you to buy. If you’re uncertain on your income, last thing you want to do is buy a house and not have the means to pay it. So if you’re not really dialed in on your income, then it’s probably not a good time to buy. You might have a smoking deal on rent. If you’re locked into a really low rent payment for the next few years and it fits your situation and fits your budget, it might make sense for you to stay there. So it really depends on your individual situation on what’s going to happen. But I kind of wanted to show you the math and really focus on this and we still have an extreme supply shortage. When it comes to buying a home, if you’re a first time homebuyer, the biggest hurdle that you have to get over usually is downpayment. There are some really cool programs for first time homebuyers that help you over that hurdle. There are silent seconds. There are grants that will help you with the downpayment. I would love to run the numbers for you and show you the math on those so you can make the decision and decide between these two. The most important things that everyone wants to look at is what’s my money due at closing and what’s my monthly payment. Let us run the numbers for you and show you and then you can decide. Thank you very much.” -Jerre Allen

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