Real Estate Housing Market On the Rise
Looking back to early 2020, real estate prices were already on the rise. But since the onset of the global pandemic, we have all witnessed an unprecedented housing market which became completely unpredictable due to the uncertainty that came from far-reaching and ongoing implications related to COVID-19. All-time low mortgage rates coupled with all-time low home inventory rates has launched us head on into one of the hottest and most prosperous real estate markets we may possibly see in our lifetime.
What Are the Current Market Trends in Real Estate for 2022?
After almost 2 full years of representing buyers and sellers through the pandemic, we anticipate the upcoming spring market to be our best one yet based on a number of factors:
the continued lack of home inventory
the sheer number of qualified buyers waiting to secure their next home while locking into favorable mortgage terms
historically low interest rates
Importantly, interest rates are expected to continue to rise by the end of 2022, which will likely change the 2022 real estate market dynamics. As home prices continue to climb, higher mortgage payments can create eligibility and affordability challenges for some buyers. Let’s use a $500,000 mortgage for example. According to the National Association of Realtors (NAR) chart below, this time last year the 30-year fixed rate was at 2.75%, which amounted to a principal and interest monthly payment of $2,041. One year later, that rate is up to 3.5% - which means an additional $204 a month in principal and interest. Now, add to this the possibility of more upward swings for mortgage applicants who haven’t locked into a rate.
Still, while higher rates are less than exciting, the reality is that rates are still very favorable and are representative of what market rates were pre-pandemic and for the majority of early 2020 before they started going down.
While it's clear that the current market favors sellers and will continue to, despite many obstacles and being faced with heavy competition, buyers are also winning and achieving the American Dream as we know it. Data from the 2021 NAR Profile of Home Buyers and Sellers show:
activity remains very stable
94% of buyers said they were satisfied with the home buying process
34% were first-time buyers and what a time it is to be purchasing your biggest investment!
Will Housing Prices Drop in 2022?
2022 is pointing to no immediate signs of cooling off. Experts project an average increase of 5.1% in home prices, with Fannie Mae estimating an increase as high as 7.4%.
For buyers, it may require some compromise and flexibility. For example, paying higher sales prices and being flexible as it relates to purchase conditions are key factors in an offer being accepted. This will be something we continue to see play out with multiple offer scenarios above list price and buyers who are willing to pick and choose battles on what is critical to get to the finish line.
As sellers begin to think about listing due to downsizing, upgrading or venturing into a brand new area, they can count on seeing a very healthy turnout on the sale of their home as we saw in 2021 with homes selling for median of 100% of the final listing price and receiving an average of four or more offers before closing (source: 2021 NAR Profile of Home Buyers and Sellers, REALTORS® Confidence Index).
Now is the time for sellers to consult a real estate expert to discuss pricing strategy and how to best prepare for a successful listing. It’s also equally important for sellers to assess their next destination and understand the buying landscape to properly balance both sides of their transaction.
Tips for Buying and Selling in a Seller’s Market
Here are some tips to set yourself up for success in the year ahead:
Tips for Sellers
Choose an experienced real estate expert with a proven track record of success and service
Timing is everything! Leverage the current market opportunity to maximize success
Know where you are heading when your home sells and what your timeline is
Staging and professional listing pictures make a meaningful difference in driving buyer appointments which ultimately should yield more offers
Tips for Buyers
Choose a real estate expert who is responsive and knows how to get offers accepted in the current market conditions
Know your buying criteria and be prepared to act fast when you find “the one”
How to Succeed in a Seller’s Market
While no one can predict exactly how the months ahead will play out for sure, we can agree 2022 is expected to be another healthy market that may see some shifts along the way and those looking to take action should be prepared accordingly. What better way to prepare than to consult a real estate expert who understands the 2022 real estate market and can leverage their experience and resources to help you buy or sell your home!