The wild rollercoaster ride that was the 2021 real estate market packed a thrill a minute for buyers and sellers alike, and it isn’t quite over yet. All parties need to remain seated and buckled in at all times! This year might not have as many twists and turns. but it’s definitely maintaining its own momentum. While sellers still remain at an advantage in 2022, according to experts the market is beginning to ease up for first-time buyers. We have identified eight trends that we believe will continue to shape the market, and paying attention to them will help you navigate the home buying and selling process.
- It remains a seller’s market. — Although sellers are not expecting multiple offers before noon on the same day the property goes live, as was often the case in 2021, highest and best is still being called for at some point in the game. A good way to check the pulse of your market is to check out the number of days a home has been on the market. If you are struggling to find a home due to inventory, and are continuing to lose on offer wars, try looking at homes that have been listed for more than 21 days. Although buyers naturally think there is something wrong with homes that have been for sale for that long, generally speaking, they were overpriced and have been properly readjusted. If you tour the property, you may find yourself pleasantly surprised.
- Functionality features like mental health spaces will dominate. — Designs that promote overall wellness will be prominent in homes, and these self-care, self-love items will come with a hefty premium, for example a spa-inspired bathroom vs/ just a regular one. According to Zillow, a freestanding bathtub can lead to a 2.6 percent premium on a home’s overall sale price vs. a regular tub. Think minimalist meets Zen and expect to see homes nourished with natural sun light and staged with fake plants as greenery.
- Affordability is unpredictable. — Experts predict both home prices and mortgage rates will continue to rise. Be sure to do lots of research when looking for a lender that is local to your specific area and offers a healthy combination of low rates and low fees.
- Second homes are trumping primary residence — Zillow is predicting that Gen Z and Millennial buyers will more likely be interested in purchasing what would naturally be considered a “second home” before investing in a primary or permanent personal residence. The logic is simple: Remote work options are on the rise along with the desire to make money by renting out spaces that aren’t in use. (Think Airbnb.) The current generation of home buyers are not looking for commuter ties to big cities, but rather vacation homes as investment opportunities in rural areas that can help them build equity in the interim.
- Rent is on the rise — According to realtor.com, the demand for rental units is driving rates higher across the country. Buying a starter home could be more affordable than renting in some of the current markets. This may be somewhat of a Catch 22, however, because home prices are so high, thus increasing the demand for rentals.
- Outward bound — Since the pandemic, buyers have been heading straight for the ’burbs. Realtor.com reports that viewers of suburban home listings have gone up by 42.1 percent since the onset of COVID-19. The average size of a single-family home has also increased, up 6.2 percent to a whopping 2,541 square feet, according to the National Association of Home Builders.
- The art of compromise — With home inventory remaining low, buyers are learning to settle for less when searching for their purchase. According to Zillow, 81 percent of buyers have had to make one or more compromises in order to close the deal. That being said, realtors often suggest using the 80/20 rule when conducting a home search. If a home meets 80 percent of your search criteria, your realtor will suggest considering putting in an offer.
- Homebuying takes time. — Don’t expect your new home to fall into your lap. On average, a homebuyer will tour 15 homes according to a report from OpenDoor, whether it is done virtually or in person. Remember, pictures can be deceiving. Always tour the home and neighborhood in person, and at different times of the day, and be sure to do so before time runs out.
If you’re selling, remember to clear your home of clutter, leaving counters bare and windows exposed to let in the maximum amount of light. Remove any personal items such as photos and wall paintings, so that the prospective buyers can better envision their own belongings in the space you’ll be departing.
And to both buyers and sellers, be sure to inform your realtor of your priorities, restraint and schedules. Communicate your needs and project a timeline if possible. Doing that and bearing the above trends and recommendations in mind will put you in the best possible position to enjoy the ride!
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