A person’s home has always been important, but with everything that has happened over the last couple of years, they hold even greater value than ever before. They are the place for us to let our hair down, not to mention our guard, and just exhale. This year, like last, the market has been a unique one with skyrocketing prices, record low interest rates, and phenomena like appraisal gaps and waiving inspections. And this year is sure to be unique in Michigan real estate and across the country as well. So, while we advise you to expect the unexpected, here’s what other real estate experts predict for 2022.
A seller’s market
This isn’t unique from last year, nor is it good news for home buyers. This year will again be a seller’s market. Real estate experts predict that prices won’t be as inflated as inventory rises in some places, but they will rise causing a continued challenge for home buyers to not only find a place they love, but a place they can afford.
Patience is the order of the day (the year) for home buyers. Likewise, they should save, save, save so that they can have cash to entice sellers and so that they have some wiggle room on their budget.
Interest rates on the rise
Interest rates have crept up in recent months, but they are still relatively low at 3.7% for a 30-year fixed. Home buyers should do research and find a lender who offers a low rate along with low fees. They should also make sure to get pre-approved for a loan rather than just getting pre-qualified so they are able to make an offer as soon as they find THE home.
A second home first
Many savvy youngsters have been snagging investment properties even before purchasing their first primary residence. With a trend in remote work, they can drive out of the city for short stays, and then rent it out the rest of the year. Those interested need to be prepared to put down a sizable down payment of 20% instead of the 3-4% for financing a primary residence.
Rentals are harder to find
In many areas, there is a shortage of rental properties across the nation which has driven rental prices way up. This may inspire first time buyers to purchase a starter home more quickly than they originally intended (that is if there are any available). They need to keep in mind that while their mortgage might be lower, they do have to budget for snow removal/lawn care services, higher utility bills, waste removal, not to mention constant repairs that come with home ownership.
What home buyers want
While beggars can’t be choosy, home buyers in 2022 are looking for spaces that are comforting and have the room to do the things they once did elsewhere. For example, more and more people work from home, so having a space where they can do their work is essential. Being able to workout at home and store their workout equipment is on the minds of many home buyers. They also want green space so that they can get outdoors in their own private garden. And, having rooms with great natural light to bring the green in and spaces for meditation and quiet like a sun room or a spa bathtub hold a lot of appeal for those searching for homes. If you are a seller and can stage these types of areas, you just might attract even more home buyers than before.
Time and compromises
Home buying this year is going to be much like last year; people have to be ready to invest a lot of time into finding a home, and they will likely have to make more compromises. Many home buyers are looking at 15-20 houses or more to find the right home at the right price (not to mention one that doesn’t get swooped up before they can even make an offer). Also, people will have to give up neighborhood preference, that fireplace, or a large outdoor space in order to get a home that meets at least some of their wants.
Many cities are starting to see a rise in revitalization efforts of large older homes in popular neighborhoods. Developers are gutting and remodeling them into smaller units. Older buildings in cities’ downtown areas are being bought up and converted into residential properties.
Cash deals dominated the 2021 market and made it difficult for the average home buyer to purchase their dream home. Experts believe that 2022 will be more of the same. Cash buyers don’t have to meet financial requirements, like appraisals, to complete the sale making them a prime choice of sellers and tough competition for traditional home buyers.
The real estate market has been a wild one in 2021, that is why you need an agency that understands it and can help you navigate the unexpected in 2022. At 616 Realty, our agents are there for you, whether you are buying or selling, and your goals are our priority. Contact us today.