Main Takeaways for Sellers
- It will still be a strong seller’s market, but compared to 2021, there will be a smaller likelihood of a bidding war driving up your sale price.
- Get ahead of preparing to sell your home. Repairs and upgrades are taking longer to schedule and complete due to shortages of supplies and labor.
- All real estate is local. Some markets, or sub-markets, may be stronger or weaker than others.
- Working with a realtor holds steady in getting sellers the best results in the sale of their homes.
Main Takeaways for Buyers
- Low housing inventory and high demand will continue to create a strong seller’s market, but not as intense as the peak of 2021.
- Home prices are expected to continue rising, but at a slower pace than last year.
- To avoid homebuying FOMO (fear of missing out) and panic buying, know what you can afford and stick to a realistic budget.
I Wouldn’t Say “Normal” but We’re Seeing Improvements
While we’re still a bit away from a “normal” market, we are certainly seeing improvements over the year behind us.
Approaching the Spring homebuying season, many homebuyers are still likely to face somewhat of an uphill battle, but it shouldn’t feel so rough as 2021. Last year was pretty brutal for buyers, particularly those coming in FHA or VA financing. If that wasn’t hard enough, buyers were given double for their trouble has home values spiked upward almost 20% in 2021.
While housing prices aren’t expected to drop in 2022, the increasing rate of prices should slow down. Buyers may still face bidding wars, but they aren’t likely to be as intense or as frequent. In 2021, all-cash offers and conventional loan offers with appraisal contingencies waived were often needed to win the bid. As the market continues to shift, negotiations should be more favorable for both sides and you just might find the room needed to be more flexible with the terms of your purchase contract, even if you aren’t necessarily getting a deal on the price.
If you’re planning on buying or selling a home during the spring 2022 homebuying season, here’s what four experts forecast the market to look like and what you can do about it.
More Like a Regular Spring Season
If you start seeing ads and agents shouting with megaphones about what a “hot market” it is for sellers and about the market being abuzz, don’t panic – be grateful.
Spring is always a high demand season so it would be fair to expect a continued fast pace (Hint: that means you should probably call me now so we can get you ready hit the ground solid as you step into the market.). This increase in market circulation is a good thing. The last thing we want is stagnation and thankfully, that doesn’t look to be of any concern this Spring or this year.
Though inventory is expected to loam a little lower than normal, this year is still expected to bring an increase in available homes over what we saw last year when a number of fears and factors prompted sellers to stay put and ride it out a while.
It Will Still Be a Good Market for Sellers
Buyers may still face bidding wars, but not as often or as intensely as before. Home appreciation is still expected to continue however, not at the same rate as was seen the year prior.
What may be of greater concern to today’s buyers (and sellers – yes, this will affect you too) is the upward trend being seen with mortgage rates, especially in step with economic concerns and trends stemming from inflation, war and other factors that have driven more investors to turn to bonds rather than stocks as a safeguard for their money.
For my buyers: As mortgage rates increase, you want to keep in close contact with your favorite lender. Seriously. Buy them dinner. Make them your best friend and cherish every update they give you to ensure that when you do go to make that move, you get the best loan product possible to meet your needs and to best fit your overall financial picture.
Understanding your financing is INCREDIBLY IMPORTANT! You need to have a solid handle on the upper limits of your homebuying budget, especially before potentially surpassing that in an emotional play to get the house.
For sellers, you’ll want to get ahead of any maintenance or upgrades you want to make before putting your house on the market, especially if it’s work you can’t do yourself. Supply chain issues and labor shortages have created a situation where renovations and repairs need to be scheduled farther in advance than before.
Homebuying demand will fall off somewhat but not plummet as interest rates and other economic strains prompt some buyers to put the American Dream on hold.
There was a rush of homebuying over the past 12 to 18 months for a number of reasons. We saw demand continue to hold on the high side through what would typically be a very slow season for real estate as people still in the market from the months prior continued to work at getting into a home. That understood, I think it’s safe to say, those buyers are unlikely to be buying another home in 2022.
At the present, a sharp drop in home prices is not anticipated but the real estate market does fluctuate and can become particularly quick to shift in light of other social and economic factors as we currently see unfolding around us.
Is It Really a Good Time or Should I Wait?
Whether right now is or isn’t a good time is highly subjective. Some questions to ask:
- Does it make sense with your current employment situation?
- Is the home you/your family are in actually working for you? (Is there enough space/too much space? Does it still fit the budget? Does it fit the lifestyle you want to live? Do you love where you live or feel you need a fresh start?)
I’m not going to tell you now is or isn’t a good time for you to move. This is a very big move and a very expensive one at that. That’s why it is SO important to really think this through to determine whether the costs of waiting outweigh the benefits of not and vice versa. Trying to “predict” the market can be risky. What makes the most sense to you given the current state of your circumstances and the market?
Buying a home isn’t just a financial decision. It’s also a lifestyle choice. Buying a home should make sense for your personal and financial situation.
Shortage of Homes for Sale
The rate at which home prices are appreciating should taper off but remain positive through the 2022 homebuying season. This is due to the gap and natural effect of supply and demand. A large contingent of millennials are hitting the prime homebuying years, and for the last decade, there haven’t been enough homes built to prepare for this demand.
As it stands, supplies and labor add to the challenge of meeting this demand with newly constructed homes. Yes, they’re still being built and sold but these factors have created their own obstacles for builders to overcome and buyers to wait patiently as they do.
Buyers looking to make a move within the next year will want to be well prepared ahead of time. Buyers may have a little more time compared to 2021 to make a decision but they’ll still likely have to move fast to keep up with that market velocity.
In case it needs to be said again: this is where it would be good to go ahead and start having those conversations with an agent that can help you get positioned to succeed in this market.
Again, hone in on your budget so you have a firm plan of what you’re willing to spend for a property that meets your needs.
What’s in Demand?
A larger percentage of the workforce has the opportunity to work from home, which may fuel competition in housing markets typically known to be more affordable, such as smaller cities and suburbs of cities. Remote work and the experiences of previous lockdowns has prompted many buyers to reconsider what they need and really want in a home and to consider homes a bit further off the beaten path than what they would have previously.
Don’t Make a Panic Purchase
I’ve been there – talking clients off the ledge as a moment of desperation had them talking offers on homes that fit most nothing they’d said they needed or really wanted, less being in the right school district. (Yes, they were crazy glad we had that talk when they finally won on the right home.)
You wouldn’t propose to someone you would never want to be married too because you’re sick of being lonely on date night.
I get that housing is a very real need but I also appreciate that it is a huge commitment. No, it’s not “’til death do you part” but it is a very big decision that should not be made out of emotion – particularly negative ones such as fear, panic or a sense of hopelessness.
Take the time to find a home you can afford for the long term, and that can comfortably fit into your lifestyle.
Preparing to Sell During the Spring 2022 Homebuying Season
As its expected to continue to remain a seller’s market, you can expect a good return ofr your efforts should you choose to list this Spring.
That said, being a sellers market does not mean that you should dive right in without the proper preparation or support. Many think that because so many sellers are having such a success in the market, they don’t need an agent or they don’t need to put as much care into the preparation of their home when getting it ready to sell. Now, I know this is coming from someone who is an agent but understand and respect that’s why I’ve had the inside look to tell you that these are very bad assumptions that cost many sellers dearly.
Proper Planning Prevents Piss Poor Performance
You may not think that people will notice if you cut a few corners here and there but let me assure you, touring homes with buyers, they pick up on a great many things and have a way of coming to their own conclusions beyond those findings. Getting the best possible offers on your home requires proper planning, making sure that the home shines and presents at its best. That might not always mean what you think it does.
Be careful that you don’t fall into the pitfalls on either extreme, either from going all preparation’s and just throwing the house up for sale on Zillow or spending a lot of money on the wrong improvements and repairs only to be disappointed when you find they don’t bring the return on investment you’d hoped. This is where it is so important to team up with an agent that can help you look at your home to see where your wisest investments can be made and where your time and energy is a better spent and getting the home ready to have its best appeal to today’s buyers.
Also understand, the condition of the home can be a huge factor in who might take interest in your home and for what price. Selling it “as is” with much needed work is more likely to appeal to an investor looking for a good deal on a property they can expect to gain equity in. Turnkey homes priced closer to the top of the home’s valuations is more likely to appeal to people who are busy and just want to unpack and keep rolling with life or those that lack the skills/patience for DIY’s (hint: these people may be just as tunred off by outdated paint colors as a leaky faucet).
Of course, all of this is all the more reason to hook up with an agent now that can help you get a firm handle on what you should be doing to get your home ready to hit the market.
Creating that game plan and checking things off your list should all be tackled as soon as possible, particularly where services will need to be delegated to professionals such as plumbers, carpenters, electricians and the like, many of whom are already working with a major backlog.
Be Warned: Your Agent-less Efforts Could Cost You WAY More Than That Commission!
It’s not uncommon for people to think that they don’t really need an agent to help them sell their home, especially when the market stands in favor of the seller. Instep with that line of thinking, many sellers will just throw a sign in the yard to list the home as For Sale by Owner in hoping to save maybe a 6% commission.
How fascinating then to find that For Sale by Owner listings tend to sell for 16% less than those listed by a real estate agent.One thing that should be understood is that a rear realtor is going to look at the property from a different perspective than the seller, taking into account factors that are important to any prospective buyers. We get to take a more objective look and personally assess the data that supports a pricing strategy set to help our clients win.
Let me assure you, if you are running with a Zillow estimate or something kicked back to you from an automated system based on a set of algorithms, chances are good you’re either going to see that home sit on the market, wondering why no one is buying, or you were going to likely walk away leaving a heck of a lot of money on the table.
This is all on top of the fact that not having your own agent doesn’t mean you won’t end up paying a commission anyhow to the buyers agent and getting your home sold and you would be doing so without the representation and protection of having your own agent. Your realtor will help you position your home correctly within the marketplace, market your home to appeal to as many prospective buyers as possible, help you manage the transaction from start to finish and more while taking a ton of stress off of you so you can focus on bigger and better things like finding your next home.
Preparing to Buy During the Spring 2022 Homebuying Season
In the coming months, mortgage rates and home prices are forecasted to rise. This will cut into your buying power, so it’s important to begin preparing financially as far in advance as possible. Building your credit score can help you qualify for a lower mortgage rate. You’ll want to save for a down payment, closing costs, and unexpected repairs and maintenance.
Also, if applicable, now is a good time to start talking to your lender about first-time homebuyer programs. These programs can provide thousands of dollars to put toward your down payment or closing costs if you qualify.
Overall, most housing markets will be competitive, although some may be tougher than others.
With it still being a strong seller’s market, you may need to be patient as a buyer. You don’t want to purchase in a panic and end up with a mountain of debts and regrets.
You may want to be more flexible with where you live or what you buy. A condo or townhouse a bit further away from where you originally planned on moving could be more affordable than a single-family home in an urban area. You may not find your dream home today, but a home that works for you right now can be a stepping stone to another home down the road. Even still, I’m confident we can find you a home you’ll truly love. Tough does not mean undoable. That’s why I’m here to be in your corner, supporting you throughout this process. Just give me a call. I’m happy to help!