Is This a Good Time to Buy or Sell a Home?

By Bill Primavera

When it comes time to consider a topic for another Home Guru column, I sometimes check with my wife Margaret for ideas. She usually comes through for me.

This time, she suggested that I research the first Home Guru column I ever wrote, which would have been 13 years ago, and to update the topic in today’s home market.

Interestingly enough, the first column I wrote was titled, “Is This a Good Time to Buy or Sell a Home? And that is certainly a reasonable question for anyone at any time.

So how about right now?

In short, the situation is that the COVID-19 pandemic has upended the home-buying process. Historically low mortgage rates coupled with an inventory shortage has created a red-hot market, with houses selling within hours of being listed, often for well over asking price.

But, no one knows for sure what the future has in store. Housing experts opining on CNBC’s “Make It” predict that in 2022 buyers can expect similar trends to the past two years: elevated prices, low inventory and fast turnaround.

That said, although it will continue to be a seller’s market – home values are expected to increase by double-digit percentage points, Zillow predicts – it won’t be quite as wild as it was this year. 

Here’s what the experts say you need to know if you plan to sell or buy a house in 2022.

First, inventory will remain scarce.

Even before the pandemic, there was low housing stock in the country. And COVID-19 supply chain troubles and a labor shortage have only made things worse. Though builders are trying to ramp up production, inventory will remain scarce.

In fact, the number of homes listed for sale fell to a record low at the end of November. Though there will likely be more listings in the spring and summer, as is typical, it is unlikely there will be enough to meet demand, Zillow research suggested.

The gap shrunk in 2021 and will likely shrink again in 2022, but the housing shortage will be a defining feature of the market once again, according to Zillow’s 2022 housing outlook.

Second, interest rates will rise.

The Federal Reserve is expected to raise interest rates a few times in 2022, which means mortgage rates will likely increase. Both Redfin and Realtor.com predict a 30-year-fixed mortgage rate will reach 3.60 percent by the end of 2022, compared to an average of 3.30 percent now.

That’s not necessarily bad news for buyers. The silver lining of higher mortgage rates is that fewer speculative buyers will be in the market, because there is less money to be made. That could help the average person.

When you have higher interest rates, more of the people buy homes to live in them. That’s something the market will benefit from.

Third, prices won’t drop.

Those hoping competition will slow in 2022 are out of luck, according to economists from Zillow and Realtor.com. Economic trends including tight supply, elevated demand and low mortgage rates, will continue to give sellers the upper hand.

Potential buyers can expect bidding wars on many homes, particularly in the spring and summer. While no one can predict exactly what will happen, the trends listed above mean prices will continue to climb. In fact, Zillow predicts home values will rise by 11 percent in 2022, which is not as much growth as in 2021, but still substantial.

Young buyers will be at a disadvantage.

Millennials, who are at peak first-time home-buying age, will remain at a disadvantage compared to older generations when it comes to buying a house. This is not only because homes are so much more expensive now than they were when baby boomers and older generations were buying their first homes, but because boomers are staying in their homes longer as they live longer.

That means more and more first-time homebuyers are likely to need financial help from family and friends to make a down payment. Obviously, that will limit who can buy a house.

Housing affordability in the U.S. has been an issue for buyers, particularly young ones, for some time. But the issue has only been exacerbated since the onset of the pandemic, and will continue.

All of that said, experts say to be prepared. Buyers should research ahead of time so they are ready to go when they find the right listing.

When buying a home in the next year or longer, it will be important to watch new listings and be prepared to not only visit the home quickly, but to decide and extend an offer almost immediately.

Still, buyers shouldn’t overpay. Prices will be up, but that doesn’t mean anyone should take something outside of what’s reasonable for their budget.

Bill Primavera is a realtor associated with William Raveis Real Estate and founder of Primavera Public Relations, Inc., the longest-running public relations agency in Westchester (www.PrimaveraPR.com}. To engage the services of The Home Guru to market your home for sale, call 914-522-2076.