2022 Housing Prediction #7: With iBuyers having less competition from other iBuyers, and i-Buyers having to pay more to fund their businesses (to purchase the actual houses), we predict that i-Buyers will start offering and paying less for the homes, thus they won’t be a competitor against the retail buyer anymore. (Zillow’s mistake).
In Q3 2021, iBuyers accounted for 1.6 percent of all homes purchased in the U.S. That’s around 28,000 homes, nearly double the 15,000 homes purchased by iBuyers in Q2.
Also noteworthy: IBuyer Market share in Phoenix, the largest iBuyer market, peaked to a new high of 10.8 percent. This is the first time iBuyers have exceeded 10 percent market share in a major market — a significant if temporary, achievement.
While Opendoor and Offerpad improved their net profit and loss in 2021 (benefiting from record home price appreciation), Zillow’s just got worse (and that’s excluding the $304 million inventory write-down) — another reason Zillow Offers just wasn’t working out.
Additionally, there is increasing scrutiny of i-Buyers from other entities, for example, The Los Angeles City Council voted last week to explore different ways of preventing i-Buyer companies like Zillow, Open Door, Rocket Homes, and Redfin from purchasing single-family homes. They state that they believe the i-Buyer, tech-driven platforms are pushing home prices even further out of reach.
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2022 Housing Prediction #8: Renters will also feel the pricing increases. Renters will need to save an extra $369 per month on average just to keep up with the increases in home values / their landlords raising rent as a result.
*We could be wrong if some sort of legislation is passed to control rental price increases. Remember the eviction moratoriums that were passed?
2022 Housing Prediction #9: Mortgage rates will continue to run at historically low rates, with massive pressure from all sides to keep them that way.
According to Bankrate, who surveyed a collection of the nation’s largest mortgage lenders, as of November 12th, 2021, the average rate for a 30-year fixed mortgage is 3.07 percent. The average rate for the benchmark 15-year fixed mortgage is 2.40 percent, down 8 basis points from a week ago.
- At the current average rate, you’ll pay $421.60 per month in principal and interest for every $100,000 you borrow.
- That’s lower by $6.50 than it would have been last week.
- Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $390 per $100k borrowed.
2022 Housing Prediction #10: Buyer’s Agent commissions will continue to erode, become more negotiable, and even optional. Remember, the listing agent always wins! The buyer’s agent commission will no longer be seen as an ‘entitlement’ to the agent.
The National Association of Realtors just approved the public display of buyer agent commissions. Agents may not filter based on this, but it is interesting that the ‘standard’ commission is no longer assumed.
Remember, there are no buyers who ‘have to’ buy, only sellers who ‘have to’ sell! Make the commitment to being a powerful listing agent.
Tomorrow’s show is 2022 Real Estate Predictions 11-14
