The Covid-19 pandemic upended the home-buying process. Historically-low mortgage rates coupled with an inventory shortage created a red hot market, with houses selling within hours of being listed, often for well over asking price.
Depending on whether you’re the buyer or seller, you might be very happy or very disappointed to learn that home prices are poised to rise in 2022, most experts say. While headwinds like rising mortgage rates and a significant uptick in Covid-19 cases may impede price growth, they won’t stop home price appreciation from climbing.
“Much of what drove high price growth this year will follow us into next year,” says Nicole Bachaud, an economist at Zillow. “We will expect to see prices rising at extremely high levels for the first few months of 2022 before beginning to taper off towards more normal levels.”
Most experts say housing demand will stay strong in 2022 unless inflation continues to outrun wages at the current feverish pace, which could stall buyer appetite. Rising inflation is also putting renters in a pinch who can no longer afford to save as much for a down payment when rental rates are skyrocketing.
The national average rental price for a one-bedroom jumped 21.3% and more than 16.7% for a two-bedroom in October on a YOY basis, according to the latest Apartment Guide and Rent.com report.
“What can affect demand is the affordability challenge,” says Danielle Hale, chief economist at Realtor.com. “One thing that can offset that is a more competitive labor market.”
A recent survey by the Conference Board suggests a 3.9% in wage costs for companies in 2022, which would be the highest jump in salaries since 2008. But even this bump wouldn’t make it easier for most entry-level buyers to access homeownership.
The wild card that could cool home prices is getting Covid under control enough that it would convince people to move back to big cities, says Todd Teta, chief product and technology officer at Attom, a property data firm. He also says that the reverse could happen—a spike in Covid cases, for example—stoking more interest in suburban real estate.
“If the pandemic fades, interest in rental housing in congested urban areas could rekindle, especially if employers start demanding that more workers return to their offices. That could significantly reduce buyer demand and ease the pressure on prices,” Teta says. But “all of this will depend on how many more people with the means to buy are worried about where they live now and how the pandemic proceeds.”
It’s important to note that while these are national trends, real estate is local. So while places like Boise, Idaho had a 37.3% price jump YOY, Philadelphia saw more modest price growth of 9.9% during the same period.
Why it is vital to choose the right Real estate agent
1. Real estate agents can help price your home to sell. Generally, as the seller, your primary goal is to sell your home as quickly as possible at the best price, so you can move on to your next place. However, a significant factor in making a quick sale is ensuring your house is appropriately priced for the market. As the homeowner, it’s easy to think you know what your home is worth, but there’s likely a bit of subjectivity that goes into your estimate. A real estate agent has a more fact-based process that involves pulling comparable recent home sales within a specified radius and reviewing your home against these to determine a fair asking price. If he or she is a professional with no emotional attachment to or biases against your home, your real estate agent can guide you in setting a competitive price that makes sense for the real estate market in your area.
2. They have home selling expertise. Whether you’ve sold a home in the past or this is your first time, working with a real estate agent can help you gain home selling knowledge that only an expert can provide. That’s not to say tackling the process on your own is impossible. However, since a real estate transaction is likely one of the largest financial transactions you’ll ever make,1 it makes sense to leave the ins and outs to a professional to help ensure all goes smoothly.
3. Real estate agents offer valuable professional service. As a seller, you can expect to pay a commission to your real estate agent at the closing. That factor alone is the reason behind many “For Sale by Owner” situations. However, it’s worth noting that many real estate agents offer their sellers certain perks at no additional cost, such as a professional photographer to take beautiful photos of your home, a deep-cleaning session, staging advice and more. All of these extras can make a big difference when it comes to how quickly your home sells and may not cost you anything out of pocket.
4. Real estate agents recommend ways to sell your home faster. One thing most sellers wrestle with is whether they should tackle certain home improvement projects before listing their home for sale. A real estate agent can offer advice that will help you make an educated decision before you invest in a big home project that may or may not pay off during the selling process.