Courtesy Equitas Realty
By Janet Besheer
The year 2021 was a roller coaster in area real estate year with the best annual existing home sales numbers since 2006.
Low inventory and high demand, along with very low interest rates, had properties flying off the page all year long. Median prices were at all time highs.
Experts see the sellers’ market continuing into 2022 and with a less wild seller’s market than during 2021. Home sales prices will not advance at the same pace we saw in 2021, however, the lack of supply will mean prices will continue to grow.
It is predicted that mortgage interest rates will rise at least three times during 2022. The 30-year fixed rate, currently averaging 3.3 percent, will hit closer to 3.7 percent by the end of this year. This will affect the buying power of certain buyers.
In November, the median sales price in the Capital Region jumped to $397,700 which was an increase of more than 12 percent over the median price of $330,000 in 2020. Sales prices rose for 19 months in a row across New York state.
Home prices are predicted to continue to rise in 2022, up to 5-12 percent in most markets. Affordability will be a challenge in 2022 with home buyers grappling with higher monthly costs due to rising prices and mortgage rates.
Inventory woes will continue in 2022. In 2021 inventory was down 23 percent compared to 2020. Typical “days on market” was only 23 days and homes sold at 99.2 percent of the original list prices. Months’ supply of inventory fell to 2.8 months in November 2021—a 34.9 percent drop from 4.3 months of supply in November 2020. (A balanced market is considered to have 6-6.5 month supply). As a result, buyers in every price range were frustrated by not finding a home or by being outbid in multiple offer scenarios.
It’s been a trying year for all buyers. Lack of supply will continue to plague the market this year.
New homes sales declined in 2021 because of restrictions in zoning laws and supply chain issues. New construction starts are slated to be up in 2022 as builders catch up to the usual balance of already-completed vs under-construction vs not-yet-started homes. New homes in many cases are the only viable option for buyers who can wait for the construction process to finish.
People will continue to work from home and hybrid forms of workspaces are emerging. Employees will be able to live farther away from the office and the suburbs will continue to grow.
The commercial apartment market is going to remain strong this year and rents will continue to increase. It is unlikely industrial real estate will see much change although supply-chain issues will still plague new construction.
The big question mark is the office market. A real recovery for office buildings all over the country hinges entirely on the return of employees to the office but there’s no evidence this is happening sometime soon.
How do these things effect buyers? Buyers should carefully consider their budget before starting their search. Talking with a lender, they can ascertain how much they can afford, set a price point and run the numbers on how their monthly payment will change as interest rates rise. Buyers should make sure that the numbers feel comfortable to them when they hone in on their search of properties.
How about sellers? Home prices will continue to stay strong this year. Even as for-sale inventory starts to grow, upping competition, well-priced homes in good condition will be able to face the competition and sell quickly. And, if sellers have owned their homes for a while, when they do sell, they can expect to walk away from the transaction with a healthy amount of cash.
As a real estate broker, I am looking forward to a very busy and successful 2022. Realtors met the challenges of the past few years with creativity, compassion and a very high level of professionalism. We helped our clients navigate through the ups and downs of buying and selling in a wild and crazy market while navigating the constraints of the pandemic and the limitations it put on all of us. We learned a lot and that knowledge will get us through 2022 with aplomb.