We’ve all heard the outrageous stories of tumbledown houses selling for record-high prices, dozens of multiple offers within hours of a new listing hitting the MLS, and bonuses and incentives to sweeten the pot from hyper-competitive buyers.
Will conditions improve in 2022 for homebuyers searching for their next home?
According to predictions, the answer may be yes. Although there is nothing predictable about the state of the US real estate market, there are some indications that we may be going back to something that is a little more like what we are used to. Here are some of the biggest takeaways from expert analysis.
Buyer demand may be beginning to slow.
Rapid home price increases is pushing some buyers out of the market, and inventory is predicted to increase, albeit modestly. This may help to overcome some of the more heated competition among potential buyers. While they may still be paying far more for a home than they would have paid before the COVID pandemic, hopeful home seekers may not have to pay outsized buyer premiums if there continues to be fewer buyers.
At the same time, more sellers are ready to cash in.
Sellers kept their homes off the market for a variety of reasons during the pandemic. As the market heated up and competition for every home took off, many sellers were simply afraid to list their houses for fear that they would be unable to find a home to buy. This was especially true in high-demand markets and niches like luxury homes where inventory was exceptionally low.
Still, other sellers were seduced by the siren song of increased equity, choosing to hold their cards until they could see how high market valuations in their neighborhoods would rise. Now many of those sellers have decided that the market is nearing its peak, and they are ready to cash out. The number of home for sale is rising, as the current sellers’ market starts to cool.
Mortgage rates have been rising.
Rising mortgage rates will deter some would-be homebuyers from the market, easing competition. As rates climb , it will be important for buyers to shop for the best mortgage and to compare multiple lenders, if necessary. In addition, buyers should focus on the fine print, checking to see how fees, which can vary widely from lender to lender, will affect their overall cost to purchase.
In addition, this is no time to dip into savings that have been put aside for a home purchase. With higher home prices and higher interest rates, buyers may find that they need more than they’d estimated to see their home purchase through to completion.
While prices are projected to remain high, some of the overwrought competition may subside.
Overall, a more stable market is good news for everyone and may help to take some of the pressure off of buyers who have been disappointed in the past by losing out in multiple-offer situations. The next six months may see both increased inventory and increased availability of homes at a variety of price points—good news for those who feared that they would be priced out of the market in their areas.
Whether you’re just starting your home purchase journey or have been frustrated over the past year, the time has never been better than now to sit down with your trusted real estate agent or broker and begin crunching the numbers for yourself. No one understands the changes and potential in your local market like they do, and no one is as qualified to help you make the decisions that lie ahead.