If you’ve been following the real estate market, you probably know that it has been many months since buyers and sellers enjoyed anything like business as usual, with record-low interest rates and inventory in markets both large and small. But now we may be able to envision a return to a real estate market that’s a little more like normal.
Home prices are still expected to remain high in 2022, but price growth is expected to continue to slow and interest rates may rise, which could price some buyers out of the market. Also, more homeowners may finally be ready to put their homes on the MLS, easing the bottleneck that has developed since 2020. All of this might result in a less-heated market, which is good news for buyers, many of whom may have been frustrated by the stiff competition in recent months.
Housing market predictions
The housing market continues to evolve as we get further from the COVID pandemic’s beginnings. If you’re thinking about selling your home, here are some market changes you can expect to see.
Reassurance that you’ll be able to buy
Many homeowners who wanted to upsize, downsize, or move to a new market were reluctant to list their home for sale during the early days of the pandemic, fearing that they would be unable to buy on the other side of the transaction. However, as inventory improves, it may be time to start looking at available homes in your chosen neighborhood and to talk with your real estate agent or broker about a buyer strategy.
Greater need for marketing
The compressed timeline and multiple-offer environment of the past several months may have made many homeowners complacent about marketing their property, foregoing photography, in-person showings, and other common marketing strategies based on the certainty of a fast sale. Now sellers will need to expect a more traditional marketing approach, including decluttering and preparing the home for open houses and showings, as well as staging, photography, and video tours.
More days on the market
While many homeowners rejoiced in overnight sales over the past several months, newly increased inventory may mean more days on the market before a ratified contract. This can be good news, since pent-up demand may mean that those extra days have the potential to generate increased interest and above-asking sale prices.
More need to negotiate
If you’ve grown accustomed to as-is, no-questions-asked home sales in your market, it may be time to recalibrate your expectations. With more inventory, buyers may be less willing to forego home inspections and to accept major property defects as a necessary cost of doing business. While you still may not see negotiations on price, expect to negotiate on timeline or on needed repairs.
How will increased housing inventory impact buyers?
Whether you’ve delayed your homebuying plans to wait out the market or were frustrated during previous negotiations, increased housing inventory may make the next few months ideal for moving forward. Here are some of the ways more homes for sale can improve the process for you.
Less competitive purchase environment
We’ve heard all the wild stories of poorly maintained homes in desirable neighborhoods selling within hours for tens of thousands over asking price with dozens of offers. With more inventory, we should see fewer of these situations and a return to a more normal sales cycle. While there may still be multiple offers and homes selling for above asking price, the overwhelming speed and competitive pressure should be somewhat alleviated.
Renewed ability to negotiate
Over the past several months, multiple offers and an active seller’s market meant that there was little or no room to negotiate with homeowners. As the market opens up, we may see fewer offers and more days on the market, providing buyers with a reasonable opportunity to ask for sensible concessions, like needed repairs or timelines that work for both parties.
Renewed focus on contingencies
Over the past months, many hopeful buyers have found themselves struggling with decisions surrounding contingencies like those related to the home inspection or financing. They worried that by asking for the protection of contingencies they would undermine their bargaining power. A return to more normal market conditions may mean that buyers can decide what strategy makes sense for their particular situation and ask for what they need without fear of blowing the deal.
More stable home values
While many sellers have rejoiced as they watched their home values skyrocket, many buyers watched these same trends with increasing alarm. In some cases, buyers were priced out of their chosen markets and home styles again and again as values increased. Now, however, a return to more normalized inventory may mean that buyers can crunch the numbers with a reasonable expectation of staying on track with their homebuying budget.
Whether you are a buyer or seller, you need to begin discussing next steps with a trusted real estate professional. Now more than ever, an agent can help you understand trends in your market and develop a strategy to assist you in reaching your real estate goals in the months ahead.