New year, new housing market, right? Well, not quite. The competitive real estate business in 2021 was due to a combination of low interest rates and low housing inventory, and real estate agents are speculating that in 2022 we'll see more of the same. If you're ready to buy a home, sell your home, or are just curious about what to expect, read ahead to find out what the real estate experts have to say about the 2022 market.
A Seller’s Market Is Here to Stay
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For those ready to buy a home, 2022 will continue to be a seller's market with very few deals to be found, especially if a home is in a good condition. "If anything is priced below market value, it's gone," Robbie Breaux, a realtor in Lafayette, Louisiana, tells Hunker. "For homes that sit on the market, it's usually due to a combination of [too high] pricing or the condition of the home. The condition of a home matters more than ever."
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Breaux specifics that fixer-uppers are no longer as appealing as they once were, since many people are working from home. In other words, it's hard to find someone who wants to live and work in a residence that also doubles as a construction zone.
While a competitive market can be challenging for homebuyers, those looking to sell their homes are advised to take advantage of this timing.
"You can absolutely demand a premium for your home right now, so take advantage of maximizing your return," Suzanne Seini, CEO of Active Realty in Southern California, tells Hunker. "That said, make sure you have a good real estate agent who will get you into a comfortable replacement property. With low inventory, you need to work with an expert who can manage the timeline and competitive market to make sure you can find somewhere else to live."
Homebuyers Need to Be Patient
Those hoping to purchase a home in 2022 will need to be patient in their search and prepared to make multiple offers on several homes.
"The most important piece of advice I would give to a potential homebuyer is to work with an experienced agent who knows their particular market," Marcus Larrea, a real estate agent with Palm Paradise Real Estate in Southwest Florida, tells Hunker. "The more experience an agent has in the market, the better the odds are that you will get into a home. I think that homebuyers should go in with the understanding that it's likely their first couple of offers won't get accepted and that it could take some time to find the right home."
The news of bidding wars or paying over the asking price can be scary to prospective buyers. However, if you're ready to buy and you have your financial affairs in order, make sure you find a professional who can work with your budget, answer any questions, and assuage fears about buying a home. It's all about having the right team behind you.
"Buyers seem to be a bit put-off or possibly uninformed with so much information floating around about bidding wars, market conditions, and what's happening on the ground," Seini says. "Getting into your perfect home is possible. Just because it sounds so crazy out there, don't be afraid to jump in and put an offer in. The current situation is not changing and waiting for a market correction that is still years away is not the solution — working with a good agent is."
A Higher Interest Rate Could Correct the Market
With home prices continuing to climb, is there an end to the competitive market? Maybe. Agents speculate that lower prices are possible with both an increased interest rate and new inventory.
"One thing that will contribute to a shift will be an interest rate increase," Seini explains. "If interest rates remain low, buyer activity will be high with low inventory. But, until inventory can catch up with demand, prices will remain high until the supply can catch up with demand." She adds, "The inventory of new construction homes has been steadily declining for more than 10 years. This is the real reason for lack of inventory today, and that isn't changing anytime soon."
Real estate agents are also speculating that there will eventually be a market correction because years of exponential growth isn't sustainable forever. "I don't want to see continued double-digit growth in terms of appreciation because when the market corrects itself — because it always does — a huge rise could mean a bigger fall," says Breaux. "Normally, market appreciation is a good thing. But salaries and wages can't keep up with double-digit increases year over year forever. They just can't."
While current events have shown us that very few things are predictable, it's likely that we'll continue to see a competitive real estate market in 2022. The end of this boom is difficult to predict, so for those ready to buy a home in 2022, a lot of patience and flexibility is required.