What’s the real estate market been like over the past two years? To some extent, the answer to this question depends on the person you ask. Sellers will tell you it’s been a crazy-strong market, full of soaring profits, great deals, and quick closings. Buyers will say it’s been a slippery slope into shrinking inventory, soaring costs, and increasingly complex hoops to jump through just to get an offer considered, only to have to start all over again when they get outbid time and time again.
Both buyers and sellers have perspectives confined to a large extent by their respective experiences. On the other hand, real estate agents tend to have a broader point of view that can see both sides of this sometimes-volatile market. Homelight surveyed almost 1,000 of these real estate pros across the country to find out what they predict for the real estate market during the remainder of 2022 and beyond.
Inflation Is Driving Real Estate Decisions
Rising prices across the board and around the world are making many of life’s economic decisions ever more complicated. That’s especially true for real estate purchases and sales. That makes sense, of course; for most people, buying a home is the largest and most significant investment they’ll ever make in their lifetimes.
Yet increasingly, consistently increasing costs in every major area are driving real estate choices or at the very least have a significant impact on them. Many buyers are electing out of hot overpriced markets and choosing more remote areas with a lower cost of living. What’s more, a home’s energy efficiency ratings are increasingly an integral part of a home’s value, particularly in the midwest and Pacific northwest, compared to a year ago.
It’s Still a Seller’s Market …
Despite mortgage rates that are causing a bit of sticker shock for first-time home purchasers, real estate agents almost unanimously agree that it’s definitely still a seller’s market for real estate. A staggering 95% say that’s still the case, up from 79% over the same time period two years ago, although down from 98% in Q1 2022.
It’s true that inventory is starting to increase, albeit slowly, in some markets. And it’s true that those rising mortgage interest rates are turning off quite a few home shoppers, persuading them to remain renters for the time being. In fact, 60% of real estate agents who responded to the HomeLight survey said they had not seen an increase in lifelong renters approaching them with a desire to purchase a home for the first time.
Bottom line: The current real estate market is the financial equivalent of a large ship—difficult to slow down, much less to turn around. So, while some indicators suggest that things might be slowing down and cooling off, buyers can still expect to experience an obstacle-laden path to homeownership in the coming months.
… Consequently, Cash and High Bids Still Rule
Rising home prices (albeit not as sharply or quickly as before) plus still-depressed inventory levels (although that may be easing up a bit) mean that committed shoppers still need to distinguish themselves and their offers in order to grab a seller’s attention. In most cases, that means higher-than-usual bids and/or cash offers—if not both.
Even though home prices may not fall substantially in the next few weeks, the steady increase of the last few years is probably headed for a slow-down. So regardless of the fact that cash sales and high bids may not be quite as widespread as they once were, frustrated buyers might find themselves in need of sweeteners for otherwise reasonable offers.
Buyers Will Find Slightly More Homes to Consider
One of the biggest obstacles for home shoppers in the last few years has been a steadily shrinking inventory of available homes to purchase. Fortunately, that inventory will
The total number of homes available for sale will probably grow, although not dramatically. Current homeowners with a lot of equity in their properties will still feel the pressure to sell and recognize that extra profit.
It’s important to consider the totality of your circumstances and needs, especially for large financial decisions such as selling or buying a home. Just like playing the stock market, trying to figure out just the right moment to enter the real estate market as either buyer or seller isn’t the best strategy. Think about what’s best for you and your family, and carefully evaluate your available options before making a decision, especially before deciding to sell your home and enter an often equally chaotic rental market.