[Real Estate Forecast] What to Expect for the Rest of 2022

People buy real estate for all sorts of reasons.

Retirement…Passive income…Appreciation…Housing expense stability…the list could go on.

But no matter the underlying reason, every buyer steps into the market with the same question:
 

Here’s the truth…

There is no “right time to buy.” 

Trying to time the market is an impossible task—if you have the money and you feel comfortable with the costs of ownership, you’re more than ready. 

Remember that everyone wants a deal and no one wants to pay over asking. (Who WOULDN’T want a price that’s lower than what the rest of the market is willing to pay?)

But in a market where there are too many buyers and too few sellers, the fact your offer gets accepted is a deal of and in itself. 

No drop is coming

As you’re thinking about buying a home in 2022, know that the market is NOT going to drop.  

In the wake of the 2008 real estate collapse, the mortgage lending industry changed its loan qualification process. The people who own the bulk of the property supply right now are financially stable, and the loans they’re tied to have been thoroughly reviewed and approved by underwriters. 

Moreover, with all the equity people have in their property right now (especially considering the amount of appreciation in the last two years), most single-family owners plan on being in their homes for the long haul. 

In other words, no one is “buying today to sell tomorrow” in the world of single-family homes. 

Inventory will remain low for the year

Could there be a slight market correction as interest rates rise?—Sure, but it will be very, VERY minor. 

You can tell it will be minor because the housing supply is falling short of demand in California (and across the US in general). 

Right now in California, the market requires 180,000 new units per year. But based on building permit applications, there will only be 110,000 units built in 2022—a 39% shortfall. 

What’s more?—There’s actually been a supply-demand shortfall in California EVERY YEAR since the crash in 2008, which means this problem has been compounding for the past 14 years.

Until supply can match demand (which it can’t because of red-tape related to permitting, labor costs, and supply-chain disruption) or until demand craters (which it won’t because California is awesome), housing prices will stay high. 

First-time buyers are facing an uphill battle

One of the most interesting things about the pandemic is that it’s really motivated owners who’ve been in their homes for five…six…seven years…to trade up for more square footage. 

This trend will persist in 2022, and it will continue to make life hard for first-time home buyers.  

When homeowners “trade up” (an apartment owner moving into a condo…a condo owner moving into a single-family home…a single-family homeowner moving into a larger home…etc.) they can leverage the equity they’ve built in their current home to make larger, more aggressive bids. 

These owners can not only afford to put more money down, but they can afford to go way over asking price compared to first-time buyers. 

Ready for the GOOD NEWS?

Motivated first-time buyers CAN do it! They really can make a purchase in 2022!

BUT they’ll need to:

That last piece is really important. 

A great agent can use their deep market knowledge, resources (lenders, home inspectors, attorneys, title companies, etc.), and transaction-management experience to help you not only get into a home in a tough market, but enjoy a smooth transaction from offer submission to close.