If your clients hope to buy a home in 2022, suggest that they save as much as possible and act fast.
2021 Market Trends that May Continue into 2022
Many of the market trends we’ve seen over the last 18-months are likely to continue into and throughout 2022.
Read, this is important…
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With buyer demand likely to far out-strip for-sale inventory in 2022 as it has during 2021, next year’s homebuyers will likely continue ditching “routine” home buying safe-guard options such as appraisals, inspections and/or even seeing a house in-person before making an offer. FOMO (Fear of Missing Out) is not going away any time soon.
During 2021, institutional investors increased their share of single-family home purchases to 18.6%, a record high, according to CoreLogics. All industry experts are predicting this trend to continue into 2022. Why? Institutional investors like having single-family homes to rent out at increasing rent prices to middle-class buyers who were priced out of the buying market in 2021.
And speaking of priced out buyers, housing prices are predicted to be less crazy in 2022 but still increasing anywhere from about 4% to 16%, depending on the forecasting model.
According to the National Association of REALTORS, 24% of total home purchases were all-cash during 2021. With more and more deep-pocketed institutional investors buying single-family homes to rent, industry experts expect the share of all-cash deals to increase during 2022. And, by the way, sellers like all-cash deals too. All-cash purchases translate into faster, more hassle-free transactions for sellers since there’s no waiting around for lenders to approve/not approve mortgage loans.
Homes sold lightning fast during 2021. According to the National Association of REALTORS, the average home last 17 days on the market throughout November 2021. (The term DOM refers to Days on the Market which is the number of days a home lasts or stays on the market before it’s sold.)
What 2022 Home Buyers Can Do to Be Successful Competitors
Agents, your advice to your home buyers is critical. Suggest that they…
1- Save as much as possible.
2 – Improve their credit score.
1 – A better credit score will increase chances of obtaining a mortgage.
2 – A better credit score will increase chances of obtaining a better interest rate on your mortgage.
3 – Tabitha Mazzara, director of operations with the Mortgage Bank of California, said, “It’s tough to overstate the importance of credit scores to a mortgage loan application.”
4 – The Federal Reserve of New York reported that buyers who took out mortgages in Q4 2020 had a median credit score of 786. That median credit score has not declined.
3 – Carefully Research ALL Down Payment Options
1 – 20% is the rule of thumb for down payments but in a super-hot market, buyers may need to put down more than 20% depending upon the property location.
2 – There are plenty of federal, state and local down payment assistance programs for first-time buyers
1 – Check out first-time buyers via the Urban Institute – Its list breaks down such programs by state
2 – There are down payment assistance programs specific to certain professions such as teachers, firefighters, and veterans.
- Check out down payment assistance programs by searching “your state) + down payment assistance programs”
For example, search for the California Housing Finance Agency MyHome Assistance Program
4 – Check out Freddie Mac’s Home Possible program that helps lower0income buyers buy a home with as little as 3% down.
5 – Be agile and fast
1 – Chances are the 2021 inventory shortage (the number of homes listing as being available for-sale) is projected to continue into 2022. Some experts predict “some” relief to the housing shortage in 2022 but all industry experts predict that the influx of Millennial aged buyers will increase into 2022 so again, buyer demand will outweigh housing supply.
2 – Glenn Phillips, CEO and lead economic analyst with Lake Homes Realty, said that many of the best deals only last a day or even a few hours.
3 – Phillips advises 2022 home buyers to “…watch for new listings (like a hawk), including ‘coming soon’ listings, and be prepared to not only visit the home quickly, but prepare to decide and extend an offer (on the home) almost immediately.”
6 – Being agile and fast DOES NOT mean overpaying
1 – Phillips advises buyers to buy COMPETITIVELY. Having a qualified and experienced real estate agent working with you ups your chances of buying competitively WITHOUT overpaying.
2 – Research and compare home prices from 2020 and 2021 in your local area. If a seller is listing a comparable house for significantly more money in 2022, consider passing on that house and waiting for the next property to come to market.
Thanks to CNBC.