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Home Buying

2022 Home Prices: What You Need to Know

The housing market’s been all over the news lately for its changing interest rates and soaring home prices. Whether you’re buying, selling or staying put, you might be wondering how those changes will impact your housing plans in 2022.

We’ll be real with you: So far in 2022, home prices have been shooting up like a bottle rocket. Now if you’re selling your house, you’ve probably got a gleam in your eye thinking about how much money you’ll make. And buyers, you may be suffering from sticker shock.

But here’s the thing: The average house price in 2022 does not decide if now is the time for you to buy, sell, or hang onto your home. You do!

Sure, keeping an eye on home prices can give you an idea of what to expect if you plan to buy or sell a house any time soon. But since market conditions and home prices are always changing, those numbers can change too. So just be aware home prices in your specific area may be a little different than what we’re talking about here.

There, we said it! Now let’s dive into the 2022 home price trends.

What’s the Average House Price in 2022?

In early 2022, the median home price in America was $392,000.1 That’s up from $305,000 in 2021.2

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Remember, median means half of all homes sold for more than that and half sold for less. It’s usually better to look at median home prices than the average house price. That’s because a small group of super expensive houses can throw off the average and make regular homes seem more expensive than they really are.

To be clear, the median 2022 home price includes both newly built and existing homes. While existing homes do tend to be cheaper than new builds, home prices across the board have gone up every year for a decade!3 And experts expect that trend to continue.

What Will Happen to Home Prices in 2022?

Home prices increased a lot early in the year. But overall, experts only expect 2022 home prices to grow by 5.7%.4 Why the slow-down in price growth?

Home prices could grow slower if inventory (the number of homes for sale) goes up, because then buyers won’t have to compete so hard for such a small selection of homes. In early 2022, inventory was at a record low: There were 25% fewer houses on the market than at the same time last year.5 But that number could change as the year goes on.

Another factor that could slow home price growth is if buyer demand goes down. That’s a real possibility because the Federal Reserve is increasing federal interest rates in 2022. While the Fed doesn’t directly set mortgage rates, federal rate hikes usually cause mortgage lenders to raise their rates too. Some buyers may back out of the market to avoid those higher rates. And since it’s hard to justify raising prices when fewer people want to buy homes, price growth will likely slow down later this year.

Now, if you’re thinking of selling, don’t stress. The average house price in 2022 is still higher than in past years, so odds are you’ll still make a pretty penny. But if you’re waiting to sell because you think your home will double in value soon, don’t count on it. You’ll want to decide whether to sell your house based on the reality of your situation—not what you hope the market will do.

On the flip side, if you’re looking to buy, the cooling price-growth rate is good for you . . . but the high interest rates, not so much. You’ll want to make sure you’re truly ready to buy a home before you dive into the market this year. (Or any year, actually. It’s always good to be prepared!)

2022 Home Price Trends

Okay, you don’t have to be a real estate expert to know location matters. But other factors can impact 2022 home prices too. Median prices for existing homes change based on things like region, home age and size, and buyer status. And while we can’t predict exactly which way the market will break this year, we can look at what it’s been doing recently.

Let’s dive into some common factors that impacted home prices last year so you can get a feel for what might happen in 2022.

By Region

Region

Home Price

Versus Last Year

West

$513,000

Up 7%

Northeast

$384,000

Up 7%

South

$319,000

Up 18%

Midwest

$249,000

Up 8%6

Home prices vary widely in each part of the country. Homes in the Midwest were cheapest, while those on the West Coast sold for the highest prices—something to think about before you head off to start an acting career in L.A.

By Age of Home

Unsurprisingly, another factor that dramatically impacts home price is whether you decide to purchase a newly built home or a previously owned one. In 2021, the median new home price in America was $365,000, while existing homes cost $294,000.7

Most buyers don’t seem to mind living in a previously owned home if it means paying a lower price. In fact, the majority (85%) of the homes purchased last year were previously owned, and the median year those homes were built was 1993.8 Here’s how that breaks down by region:

Region

Median Year Home Was Built

West

1997

Northeast

1972

South

2002

Midwest

19809

You can see that people in the Northeast bought the oldest homes (hey, nothing wrong with a classic if it’s in good shape—or you know how to fix it up!). And people in the South bought the newest homes.

But if you’re thinking, I want a home that’s brand-spankin’ new, that’s okay too. Just make sure your budget can handle the extra $71,000 (give or take a few thousand) that a new home’s going to cost.

By Size

Last year, the median home size was 1,900 square feet with three bedrooms and two bathrooms.10 The median price for those homes per square foot was $170.11

The buyer’s circumstances and the type of home they wanted also affected how much house they got. First-time home buyers and people buying previously owned homes typically bought houses under 2,000 square feet.12 Repeat buyers or those buying brand-new homes, on the other hand, typically bought houses over 2,000 square feet.13

By Buyer Status

It’s also interesting to know first-time home buyers typically purchased homes that cost a median of $252,000, while repeat buyers bought $338,000 homes.14 And whether you’re married or single obviously has an influence on the price of the home you buy as well. Take a look:

Buyer Status

Home Price

Married couples

$350,000

Single men

$249,000

Single women

$230,00015

What Do Today’s Home Prices Mean for You?

Okay, now we know how different factors are changing 2022 home prices. But what does that all mean for you?

For Buyers

If you’re planning on buying a house, home prices might look intimidating. But remember, just because you saw home prices that other people around the nation are paying, that doesn’t mean you have to buy a house in that price range.

Here’s what you should do instead: Don’t worry about the pricing trends. What? Yep! Just focus on your own budget. Your mortgage payment for your new home should be 25% or less of your monthly take-home pay (including taxes, insurance and homeowners association fees).

And remember to get a 15-year fixed-rate mortgage. That’s the cheapest, quickest type of mortgage to pay off. We recommend putting at least 10–20% down (20% is better because then you don’t have to pay private mortgage insurance).

Use our mortgage calculator to test out different home prices and see how much house you can afford. That’ll also help you figure out how much of a down payment you need, so you can start saving for it.

Last but not least, hire a good real estate agent. They can help you find a home you love that’s within your budget.

For Sellers

Most home sellers want to know one thing: How much money can I make on my home sale? The answer depends on a variety of factors, like how much equity you have and your home’s age, size and location. But generally, sellers in 2021 made a median of $85,000 when selling their homes.16 Cha-ching!

To make sure you get what your home is worth, work with an expert real estate agent in your area. They’ll be able to do a competitive market analysis to find out what similar homes are selling for in your area so you can set the right price. Plus, they’ll know all sorts of other great ways to attract buyers—and avoid common home-selling mistakes.

The same real estate agent may even be able to help you buy your next home, if you’re moving locally. And it’s always great to have help when you’re buying and selling homes at the same time.

For Homeowners

Now, you aren’t planning on selling your home any time soon. But it’s still good to know how much equity you have. That’s the part of your home’s value you own outright—either because you paid down the mortgage or because your house went up in value, or both. Your goal is to have 100% equity, meaning your house is paid off and you own the whole shebang. That’s the dream!

As a general rule of thumb, you’ll have more equity in your home the longer you live there. Here’s how much equity people had when they sold their homes in 2021, compared to how long they lived in the home:

Time in Home

Equity

5 years or less

$45,000 –73,000

6–10 years

$91,000 –104,000

11–20 years

$67,000 –114,000

21 years or more

$182,000 or more17

So if you’re thinking about downsizing in the next year or two or planning to buy that retirement dream home, you may be in good shape. And even if you’re planning to stay put, keep building equity by paying down your mortgage. Who knows—you may even gain some additional equity if your home sweet home goes up in value.

How to Buy or Sell a Home for the Best Price

Hands down, the key to buying or selling a home for the best price is partnering with an experienced real estate agent. When you’ve got a professional who knows the ropes, they’ll help you find a great deal on a home or get you the price you deserve if you’re selling.

Want to find top-performing agents in your market? That’s a silly question—of course you do! You can find them in our Endorsed Local Providers (ELP) program. These RamseyTrusted real estate agents put your needs first and actually care about helping you reach your financial goals.

Find a RamseyTrusted real estate agent near you!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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