Wow, 2021 was a wild year. With a lot that took place throughout the country, you are probably wondering how it will affect 2022 real estate trends. Read on to find out!
While the pandemic has continued to disrupt the economy (and all we seem to be hearing about are the variants), the real estate market has surprised everyone in 2021 with a continued boom, creating impressive gains for those who own their home.
Will we see this boom continue into 2022? How will the housing marketplace shake out in our current monetary climate? Whether you’re selling, buying, renting, investing, or staying put in your home, read on for all the major 2022 real estate trends you need to know!
2022 Real Estate Trends #1: Slim Pickings for Home Buyers
Okay, this might be the toughest real estate trend to swallow—so brace yourself: Inventory continues to be exceedingly low since the start of the pandemic! Although it has made a modest come back since the spring and summer of 2020, a December 27, 2021 report by the Calculated Risk blog showed that, compared to the same week in 2019, housing inventory is down 60.3%!
There simply aren’t sufficient homes on the market over the year to satisfy consumer demand.
But don’t worry, we’ll walk you through what to anticipate in case you enter the real estate market.
What Slim Pickings Mean for Buyers
Low stock means you want to be ready at a moment’s notice when house hunting—the best houses will probably be snatched up fast. At the start of spring 2021, most houses sold around 20 days quicker in comparison to the past several springs.
That doesn’t leave a good deal of time to hem and haw over your home search. If you need to find a proper home in this narrow market, here are a few recommendations:
- Sacrifice a few of your wants. If you can’t find the home you absolutely love, be willing to surrender a few “nice-to-haves” for a few of your “must-haves.”
- Find the least expensive home within the best community you can afford and improve it over time.
- Expand your search. What if the area in which you’re making plans to buy is just too competitive? You might be surprised at the gems you could find in a less popular community!
- Work even more closely with your real estate agent or marketplace (like AQRE Home). Finding one that really knows their area is the best way to discover a home that suits your price range and lifestyle.
- Get preapproved ASAP. Getting preapproved for a loan before you go house hunting is a must in any .. But in a market with one of these limited home inventories, not doing this legwork in advance gives a preapproved buyer free reign to swipe the house you want right from your hands.
What Slim Pickings Mean for Sellers
Low stock means low seller competition, which is great news for you! You can possibly expect to see offer letters flooding your mailbox the same way that Hogwarts sent Harry Potter his acceptance letters.
Since your home might be one of the (relatively) few listed for sale, you can be in the driver’s seat. So revel in possibly choosing the best offer and moving at a speed that best fits your timeline. But if you’re thinking of selling…
Find professional agents that will help you purchase your next home ahead of time! After your property is sold, you likely won’t be in the driver’s seat anymore. So decide on plans for your next home before you sell.
2022 Real Estate Trends #2: Home Prices Are Still Rising
Next up: home price trends.
Yes, the last few months of 2021 home price growth slowed down from the beginning of the year… but prices still rose more than 15% for the 8th straight month!
But some places are still above the trend. In November, prices jumped 32% in Phoenix, and 26 in Miami.
Sellers, this needs to put a large smile on your face! And hang tight, buyers—we have a few recommendations for you too.
What Higher Prices Mean for Buyers
The biggest piece of advice is: make your budget and commit to staying inside it, regardless of how much stress you experience when seeing the competition pluck great homes off the market.
To feel confident about buying a home this year, follow these tips:
1. No home can be bought without the down payment. Historically, this meant saving 20% of the home’s price in your bank account before you even start… but with skyrocketing prices, this is no longer realistic advice.
For 2022, our recommendation is to focus on your house payment instead (including mortgage, taxes, insurance, and utilities) and find a home in a price range for which this payment will be no more than 30% of your month-to-month take-home pay.
Plus, don’t forget the homeowner’s association (HOA) costs while setting your price range! These can range wildly depending on the property.
The danger of paying less than 20% for your down payment are the extra fees that can start to add up… but if you make sure your payment is less than 30% of your income EVEN WITH THE FEES, then we suggest you buy!
That way, you can get into the market earlier, and ride those rising house prices up, up up!
Most loan providers, like AQRE Lending operating in Ontario, Canada, will let you buy a house with as little as 5% down.
So, speak to your agent or crunch the numbers yourself with our loan calculator and figure out a monthly payment that your income can cover with a 5% down payment. And then locate homes on the market inside that price range.
What Higher Prices Mean for Sellers
A nice profit might be on the horizon! And that’s great news… due to the fact that you’ll really need that extra cash while shopping for your next home.
To get the best offer for your home, work with a skilled property agent who genuinely knows your local market.
And make sure to wait for the right offer. Some buyers may try to gut punch you with a low number. If you aren’t in a hurry to move, wait for an offer that gives you the most profit. Remember, you have the upper hand, so make the most of it!
2022 Real Estate Trends #3: Interest Rates Are Still Low… But Set to Rise
2021 was a year of records: The average 30-year fixed mortgage rate reached its all-time record-low of 2.65%…
So, now there’s only one place left for mortgage rates to go, according to experts, and that is up. In 2021, the average 30-year fixed mortgage rate rose already inched up 0.5%. Most experts are predicting 2022 mortgage rates to increase by a similar amount.
With this in mind, act fast if you want to get the best dead on your mortgage.
If you want to refinance your home instead of selling, or sell and get a new mortgage from a trustworthy lender who actually cares about helping you pay off your home fast, talk to our partners at AQRE Lending.
What Lower Rates Mean for Buyers
Low interest rates mean cheaper mortgages, which is great news! Just be careful not to let that pressure you into buying a house when you aren’t really ready, even IF the interest rate is set to go up.
A super low interest rate on a house you can’t afford is still a bad deal. So remember, stick to our advice on monthly payment limits and you’ll be in great shape!
What Lower Rates Mean for Sellers
If interest rates stay low, buyers will be more motivated to buy your home sooner rather than later. But if interest rates do start to increase in 2022 like experts expect… plan for your house to be on the market a little longer.
And if you don’t plan on moving anytime soon, you can still take advantage of these super low interest rates by refinancing your mortgage with AQRE Lending!
2022 Real Estate Trends #4: Online Real Estate Services Are Growing
No doubt you’ve heard of real estate services like Zillow (or our own AQRE Home) that allow you to browse, list, and send offers on homes with the click of a button. Well, these services are getting increasingly intelligent and useful.
Using a “Virtual” Agent
Hybrid services like Redfin aim to reduce traditional agent commissions by handling things online. This gives you partial services that are similar to working with an agent, but for a fraction of the cost! Think of it as a middle ground between selling with an agent and selling by yourself.
But when selling a home, be wary of the middle ground. Your home is your biggest asset, and you get the service you pay for!
Mobile or Online Closings
In related news, digital technology is also making it easier to handle home closings virtually, or at least without the need to travel outside your city. For example, many home transactions are using electronic signature apps like DocuSign and remote online notarization to streamline the process.
Even our most recent sale on AQRE Home saw a buyer and seller conclude the transaction while thousands of miles apart, in different countries! Neither needed to travel, and most of the documentation was handled without either having to leave the house. Now that’s the future!
In other words, there’s a chance you can buy or sell a house this year without getting out of your car or ever-changing out of your bathrobe and slippers.
Exclusive Perks like Free Marketing
As competition between online real estate platforms heats up, many are starting to offer exclusive perks to rise above the competition.
At AQRE Home, we want buyers and sellers to have the smoothest transaction experience with the least risk, so we offer to list homes for free, and cover all the marketing costs until your home is sold! Now that’s a perk you won’t find anywhere else.
2022 Real Estate Trends #5: Risky Buying Options Are More Accessible
Okay, let’s cover some newer “creative” ways to purchase a home that are trending (but they’re risky!).
Loans for Down Payments
Another risky buying option is taking out a personal loan to fund a down payment.
It can be attractive to buy a home without your own funds, but beware! Purchasing a home with no money down is never a good idea. It will be good at first, but these loans can carry interest as high as 10% or more, and that extra payment will rob you of your other financial goals by having you pay too much in interest and fees.
This is is a new, exciting, intelligent homeownership alternative that is really only as risky as the platform you use to do it.
Fractional owners purchase an interest in a residence or pool of residences, in partnership with other owners. All fractional owners share time in the residence (or rental income from that residence) as well as its ongoing costs and expenses.
There are many sites that offer this service, like FractionalVillas.com or the AQRE App.
What if I’m Not Buying or Selling a Home This Year?
You may be thinking… All this is great, but I’m not going anywhere anytime soon. We hear you, and here’s what you should know for now:
1. Home equity probably won’t decrease through 2022.
With most housing markets at low risk for a downturn, Realtor.com predicts home prices will continue to rise in 2022—but at a slower pace of nearly 3%.
This is still good news for sellers because you’ll likely make a nice profit when you do decide to sell. Continue to monitor how much your home is worth to make sure your equity (what your home is worth minus how much you owe on your mortgage) is still increasing.
2. A real estate market crash looks unlikely.
With all the uncertainty behind everything that happened in 2020 and with home price growth starting to slow down in 2021, you might be wondering if the housing market could collapse in 2022. Well, it’s impossible to know for sure, but economists suggest a housing crash is unlikely.
After all, housing inventory is still low, and the super low mortgage rates are still motivating buyers to enter the market, which increases competition and home prices.
3. Regardless of your neighborhood, buyers will be interested.
Since home prices have experienced rapid growth over the past few years, so some buyers are becoming less picky in their quest to own their home. In fact, determined ones might be willing to consider neighborhoods that don’t have easy access to highways or aren’t in close proximity to a big city.
If you think you live in an unpopular neighborhood or think your home isn’t what buyers are probably looking for, you might be proven wrong!
Take Control of the Trends With a Top-Notch Real Estate Platform
Whether you’re selling or buying, you can take advantage of the current trends by partnering with a professional real estate platform.
At AQRE Home, you can list for free, and browse homes across North America before you send your offer easily from the palm of your hand. And after that, the entire transaction could be handled without the need for travel!
If you are interested, our team can even match you with pre-approved agents in your area. We only partner with top-performing professionals in your market who’ve earned our seal of trust by actually caring about your financial goals, so you can trust their advice and expertise.
Find your dream home with AQRE, or list for free today at www.aqrehome.com!
And if you want to refinance or get pre-approved for your mortgage before you start looking, visit our partners at AQRE Lending for a quick and easy pre-approval process that will get you the financial results you are looking for.