Much like 2020, 2021 has proven to be quite the roller coaster ride! People continue to adjust to this “new normal” and the economy is still trying to recover. As challenging as recovery may seem, the real estate industry continues to prove that despite everything that’s going on, there will always be a need for housing.
If you’ve been thinking about buying, selling, or investing in property but aren’t keen on getting in over your head, you’ll want to familiarize yourself with real estate agent insights regarding the current state of the market and what factors could contribute to the market’s future.
Here’s a brief look at five factors that agents believe will impact the 2022 market.
1. Buyers cancel contracts once sticker shock sets in
Prices on everything have been increasing steadily throughout the pandemic and it’s no surprise that housing prices have skyrocketed as much as they have! Yet, now that the economy is starting to improve and interest rates are set to rise, buyers are hesitant about buying those high-priced homes. 54.4% of agents say their clients are cancelling contracts because they’re paying a lot more for a property than it’s actually worth.
2. As the public health crisis improves, inventory will replenish
There’s still a long way to go to get the nation to 100% vaccinated, but 32.9% of realtors believe that as the public health crisis improves, people will begin listing their houses once more. This is great news because inventory is still really low across many markets!
3. Buyers are less likely to enter bidding wars
When inventory was at its lowest, 52% of realtors said bidding wars were a very common occurrence, which was great for sellers. However as more sellers feel safe to reenter the market, those bidding wars are going to decline, if not stop entirely. This is great news for buyers because that means the competition won’t be too steep when submitting an offer!
4. Increasing cost of materials stall new construction builds
Some buyers just aren’t willing to compromise and if they can’t find the house that meets all of their wants and needs, they’ll look into new construction. A new construction home tends to be more expensive than a pre-existing structure, but now that the cost of materials have gone through the roof, the demand for new construction has decreased significantly. Why, the cost of lumber alone can add up to $36,000 to the cost of a newly built single family home! Yikes!
5. Cash buyers have all the power
One of the reasons people weren’t afraid to buy expensive houses was because the interest rates were at all time lows, which meant they were able to save tens of thousands of dollars over the life of the loan. An improving economy changes that because interest rates will rise and buyers are going to feel it in the pocket book.
Buyers that have to go through a lending company to buy a house have a battle ahead of them, and it’s not just getting approved for a loan or finding a property that’s within budget. They have to pray that there aren’t any cash offers on the horizon because more often than not, a seller will choose cash over a buyer with a mortgage because there’s no risk of the deal falling through due to financial hiccups.
Housing predictions for 2022 can change
There are countless factors at play when it comes to the real estate market and as someone who’s thinking about buying or selling, it can feel overwhelming! Yes, it’s a great idea to familiarize yourself with the current market trends across the nation, but it’s always in your best interest to reach out to a local realtor for their expert advice. The market can change at the drop of a dime and they’ll have the best insight regarding what would be your best move going forward.
