Even the most casual observer knows the 2021 US real estate market was hot, hot, hot. The combination of historically low-interest rates and limited inventory created a home-buying frenzy. It was so wild that one listing in Maryland received 76 cash offers! There are stories of potential buyers offering 10%, 20%, even 100% more than the asking price. There are even reports of some desperate buyers offering to buy the potential seller’s NEXT home for them.
Can such an effervescent market last? Will the sizzle slow to a simmer in 2022?
2022 real estate challenges - what to watch out for:
Lack of inventory - A Realtor.com forecast reports inventory will grow only by 0.3% in 2022. Builders are ramping up the production of new homes, but it takes time.
Many first-time buyers will continue struggling to enter the housing market. It’s tough to compete with offers over the asking price when you’re focused on putting together a hefty down payment.
There’s a distinct lack of affordable housing across the US (under 200K). Nonetheless, those first-time buyers who missed buying a home in 2021 are better prepared for 2022. Thanks to remote work, some of them can move to a less expensive area and take their job along with them, which opens more possibilities. Other potential buyers have discovered they’re eligible for first-time homebuyers down payment assistance programs. Programs like Freddie Mac’s Home Possible offer aid to lower-income families.
Rent increases - The tight housing market extends to rents on the rise. In fact, projections have rents increasing 7.1%. The 2022 rental market includes multiple generations. Many Boomers are taking advantage of the seller’s market and cashing out their homes and renting. On the other end of the generation spectrum, Gen Z is moving out of their parents’ homes for the first time. Remote work has seen higher-income workers relocating from expensive urban metros like San Francisco to cheaper areas and driving up rental costs there because they’re willing to pay a higher rate.
What should sellers be aware of in 2022?
Low-interest rates have made borrowing appealing for the past few years. Now, inflation is the highest it’s been in 40 years, and the US government plans to raise interest rates as a counterbalance. Some predict 30-year-fixed mortgage rates to rise to around 3.6%, putting a damper on home flippers and other real estate speculators.
Yet, the real estate agents say there’s still a lot of uncertainty around the 2022 housing market. If builders increase production, that may slow home prices. The future of WFH also plays a significant role. If employees find their roles permanently remote, many will return to smaller hometowns and less pricey areas. Some are choosing the flexibility of renting vs. buying.
One thing realtors do agree on is that 2022 will continue to be a seller’s market. Yet, sellers still need to make their homes stand out to command top dollar. Potential home buyers start their real estate search online whether they want to stay in the same area or move across the country. Home staging and great property photography will catch their eye online. BOOM can streamline the process of coordinating digital photography.
The 2022 US real estate market remains strong. Some reports predict home prices will increase another 2.9% on top of already high rates due to a competitive market. Rising rents provide an incentive for many to buy. Yet, one thing’s for sure, marketing your home still requires strong visual content to attract the best buyers. BOOM makes this easy.
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