During the last 12 months, home prices skyrocketed, homes would go off the market almost as quickly as they went on, and low interest rates coupled with high consumer demand made last year a unique time in real estate.
While homebuyers are still facing somewhat of an uphill battle when it comes to inventory and competition, the next 12 months shouldn’t feel completely like 2021, and real estate agents need to be prepared to guide them on their way.
What to Expect
Rising Home Prices
Soaring home values have continued to increase the equity for homeowners throughout the country–and while prices are expected to rise at a slower rate, there are several factors that should cause this trend to continue in 2022. We still have an ongoing inventory shortage across the United States and now, after a substantial increase in rental rates in 2021, many renters are looking at purchasing instead of renting in 2022. Combine that with historically low interest rates, a record number of homeowners tapping into the market for the first time, cash-out refinancing levels hitting their highest point since 2007, and we still have an increasing demand in a market with limited supply which will continue to drive an increase in home prices.
Rising Interest Rates
Many economists and experts do predict that interest rates will rise this year–potentially in two big jumps–up to somewhere around 3.5 percent (still below the pre-pandemic rate of 4%). When this happens, it will cool demand, slow down home price increases and lower competition. But keep in mind, it will also unfortunately lower the purchasing power for many homebuyers.
A Slow-Moving Supply Chain
Supply chain disruptions were felt all throughout the United States last year. From online shopping to microchips in cars to lumber from Canada, we all had to wait a bit. And while the entire supply chain system has finally opened up, there will still be a slog throughout the new year.
This will affect the market by causing a shortage in building materials like windows, appliances and doors, resulting in their higher costs, potentially shifting buyers to look at used houses.
Whether you’re at the pump or the supermarket, you’ve probably noticed higher prices. While this will level off on most consumer products, home prices might not be as fortunate. Overall, homebuilding materials and skilled labor will continue to come at a cost, and home prices will increase by nearly 6%, according to the National Association of REALTORS®.
What You Can Do About This
Stay Tuned In
It’s important to stay plugged in to all that’s going on in the industry, including inventory, supply chain, interest rates and home prices. This will help when communicating with clients as it shows you have your finger on the pulse of what they can expect when looking for a home and dealing with the entire process that comes with it.
Set An Accurate Perspective
Since real estate agents are still the top choice for buyers and sellers, there’s a great opportunity for agents to set the tone and the perceptions accurately from the start. Agents who are excited, positive and focused on selling more homes this year will be the ones who help both buyers and sellers win those homes in the few days that they are active.
Engage Your Clients and Prospects
Agents should stay in touch with clients and their sphere of influence, continually asking if they want to be kept in the know about listings or homes sold in their area. Learning how to cater to your clients by researching the market, creating and sending out reports and communicating useful data that meets their needs can help you ride the wave in this unique market.
In the end, this industry has shown that it’s imperative for agents to stay as plugged in as possible, and if they do, they will stand out as pathfinders for their clients.
Here’s to a successful 2022!
Todd Sumney is the chief industry officer for HomeSmart International. For more information about joining HomeSmart as an agent, please visit HomeSmart.com/join, or visit HomeSmart.com/franchising for franchise opportunities.