This is part of the story. Recession Help DeskCNET’s coverage of how smart money is moving in an uncertain economy.

Two years later, he saw a heated and competitive housing market Home prices have increased.There are signs that these record-high spikes may begin to level off. Home prices will increase in April He refused for the first time In four months, like Sales of new homes.

But many experts note that, given the continued shortage of assets, home prices will continue to rise in 2022 — just at a slower pace. In addition, future new home owners have to contend with relatively high Mortgage ratesMaking monthly mortgage payments expensive. Although the rate of borrowing has decreased slightly since the Federal Reserve announced the money The fourth increase of the year To continue the fight InflationIt is still more than 2 percent higher than in early 2022. So homebuyers should expect their mortgage payments to be higher this year, even as interest rates ease. Competition for houses.

“If we see a peak in inflation, then we see a peak in mortgage rates,” said Greg McBride, chief financial analyst at CNET sister site Bankrate. “Until inflation starts to show evidence of slowing, the outlook for a weak economy will prevail. If we’re two months down the road and that doesn’t happen, all bids are gone.”

Even though mortgage rates appear to be falling, with all of these factors in mind, a homebuyer is now paying 47% more in downpayments than they were a year ago, according to Realtor.com.

Buying a house It is one of the most important financial activities. It’s a unique personal decision that requires evaluating your long-term goals while making sure you’re financially prepared. Advance payment Home loan interest. Your job stability, family needs, and the inventory of where you want to live all play a role in determining what makes sense for you.

In the year Here are the most important things to consider when buying a home in 2022, including why it might be worth waiting or renting instead of buying.

Key things to consider when buying a home in 2022

Currently, home prices are still seeing double-digit growth nationally and all cash offers still comprise about a quarter of home auctions, said Jessica Lautz, vice president of demographic and behavioral insights at the National Association of Realtors. Does this mean you should try to hold until prices start to decline? Not necessarily.

The first thing to remember is that expert forecasts are imperfect. No one knows what will happen to the economy Warning signs For events such as failure. And trying to time the market or decide what you think will happen in the future on price or value is generally not a good strategy. “In housing, buyers are looking at home values ​​and how buying at a certain time can be better for appreciation and equity,” said Farnoosh Torabi, personal finance expert and editor-at-large at CNET. “That’s important, but your monthly home payment is ultimately the most important thing.”

Even if you have a plan, be prepared to plug into this market. Maggie Moroney, 27, is trying to buy her first home in the Washington, D.C. area, but can’t find anything affordable. Between sales and rentals, there is low inventory in both markets.

“Maybe I could try to buy something, but it might be a little bit tight, especially with interest rates,” she said. Moroney doesn’t want to rush the decision and plans to wait until she finds a home she likes, so more properties start to hit the market. “I’d rather rent a house I don’t love.”

If you’re torn between buying a home and waiting, here are some things to keep in mind.

1. Mortgage rates and price trends

In today’s housing market, high rates along with home loan rates are two of the most important factors in the game. Although mortgage rates fluctuate daily, they are expected to remain at 5-6% for the rest of 2022. So far, rates have risen more than 2% from a year ago and passed the 5.5% mark in June, but they appear to have fallen since the Fed announced its fourth rate hike in July. to be on.

Although rates have come down slightly with the most recent interest rate hikes, it’s still important to understand how the amount you lock in for a mortgage affects your monthly payments and the total amount you’ll pay over the life of your loan.

For example, if you take out a 30-year fixed-rate loan to buy a $500,000 home at 5.2% interest, you’ll pay $488,000 in interest over the life of your loan. But if you wait and buy a $450,000 home at a 6.5% interest rate, you’ll pay $574,000 in interest over the course of the mortgage. So even though you’re paying less for your home, you’re paying more than the price difference because of your interest over three decades.

Balancing your budget and looking at smaller or more affordable homes is an option considering that high mortgage rates may make your previous home goals unattainable.

2. Financial and personal goals

Home ownership is still one of the most secure Ways to build wealth. When you make the monthly mortgage payments, you are Build equity in your home You can tap later. When you rent, you aren’t making a financial investment in your future the way you live when you pay off a mortgage.

Another thing to consider is how long you plan to live in the house. If you expect to live a decade or more, you can. Refinance your loan Minimizing your monthly payments in the process. However, if you plan to move in a few years, refinancing may not make financial sense for you. In this case, it is worth considering Adjustable-rate mortgageIt can help you offset today’s higher mortgage rates by offering a lower initial interest rate that will offset or increase your loan term later.

3. Future housing trends and recession risks

As the competition for buyers decreases when buying a home, that means you’ll be opening up where you want to be. In June, the national inventory of homes increased by 18.7% this year compared to last year. More available inventory means you have more homes to choose from, increasing your chances of buying exactly what you want this year and running a bidding war for anything within your budget.

But about A The looming recession. If you wait to buy instead, you can avoid overpaying for a home that could lose value in the coming recession, Torabi said. Additionally, if the economy slows down, the Federal Reserve may raise interest rates significantly, which may try to lock in better rates on mortgages for homeowners.

Is it better to rent than to buy now?

Especially when we are dealing with a period of unexpectedly high inflation.

On the one hand, if you buy a home and maintain a Fixed-rate mortgage, that means your fixed payment will stay the same every month, no matter how much prices or interest rates increase. That’s an advantage over renting because you’re more likely to own it. Increase your rent To cope with inflation. Currently, rents are rising faster than wages, and if home buyers buy out of the housing market, competition will increase as there will be more pressure to rent. Many are already experiencing a red-hot rental market, leading to rental bidding wars and evictions.

On the other hand, although a fixed-rate mortgage can give you more predictability and budget stability, “as long as inflation continues to outpace wages, there may be benefits to renting now that the economy is deteriorating,” Torabi said.

For example, one advantage of renting over buying is that you can save money that you would otherwise use for a down payment. In times of economic uncertainty, you can stay more liquid if you don’t have to worry about making a down payment and emptying most of your bank account to secure yourself a home. Having extra cash on hand can provide you with added security if a downturn in the economy negatively affects your financial situation.

“It’s important to know the difference between owning a home and renting,” said Robert Heck, vice president of mortgages at Morty’s online mortgage marketplace. “How much is homeowner’s insurance going to cost? How much are the annual property taxes? Maybe you’re not used to paying property taxes if you rent. Consider the cost of maintaining a home.”

Ultimately, whether you rent or buy often comes down to practical considerations like whether you need more space to raise a family, or whether your lease is coming to an end — regardless of market conditions.