2022 has been a crazy year for real estate, especially if you're looking to buy a home. The beginning of this year has been marked by the incredible buyer frenzy of 2021, only to see a rapid cooldown in the spring as the national interest rate starts to rise. There's no doubt that 2021 was a seller's market, and so was the beginning of 2022. Home prices rose to astronomical prices, and this new change in trends has left both buyers and sellers unsure what lies ahead.
Has 2022 become a buyer's market? Not quite, but it certainly has some benefits to offer new home buyers in the changing market environment. Let's take a closer look at the housing market of today.
Buyer's vs Seller's Market
What exactly is a buyer's vs a seller's market? A seller's market is what we've seen very recently, where buyers are clamoring for not enough houses, and sellers have the leverage to ask for more during negotiations. Homes tend to sell above listing price and buyers offer concessions to have their bid accepted.
A buyer's market is when sellers worry that their homes won't sell. There are typically more homes on the market than buyers, and buyers have the ability to ask for more when they negotiate. Sellers take more effort to prepare homes in order to avoid selling below listing price.
Interest Rates Reduce Competition Between Buyers
Right now, the market is shifting. The pandemic-low interest rates, buyer frenzy, and housing shortage combined to create a pretty intense seller's market. But rates are rising and, as a result, buyer competition is dropping. Many buyers who were rushing to the market are no longer rushing. Those who already have a home or a good place to live may delay their purchases during this time - making room for those who need to move this year.
As the number of buyers decreases, those who need to move face far less competition. Your bids are more likely to be accepted with fewer buyers rushing to make the highest bid.
Homes are Staying on the Market for Longer
With fewer buyers piling into the market, homes are able to stay on the market for a little longer. Instead of disappearing in days, buyers can return to the leisurely pace of deciding on the right house over a few weeks of consideration. Sellers, no longer pressed by bidding wars, have the leisure to conduct more relaxed bid discussions, vetting, and negotiations with new buyers. This gives everyone more breathing room and time for smart, careful decision making on a large property purchase.
More Homes are Available at Once
Buyers are also benefiting from the increased number of homes on the market. While the housing market has been remarkably short, with great competition for the few houses available, the decreased pressure has allowed more homes to accumulate on the market at once time. This is wonderful for buyers who are looking for more variety in their house-hunting - and increases the chance of finding your dream home among the local houses on the market at the time you are ready to buy.
Home Prices are Normalizing in Many Markets
Home prices skyrocketed for a while as bidding wars drove up final closing values across the country. However, as the competition lessens, so too does the over-pricing of local homes. In the many markets where home prices were artificially inflated, prices are trending back down toward normalized levels. This is great news for buyers who are looking for quality and affordability in the same package.
New Homes Are Being Rapidly Built
The increasing number of homes on the market also comes from new constructions. Developers have been working as fast as materials can be shipped to complete new suburban neighborhoods and new condo and apartment buildings to meet the increasing buyer demand and nation-wide need for individual family houses.
This introduces the opportunity to buy a newly-constructed home and become the first family to define and enjoy a freshly built house, townhouse, or condo.
Is 2022 a Buyer's Market?
Has 2022 turned the seller's market of 2021 on its head? In many ways, yes. However, we would not quite venture to say that late 2022 real estate will see a complete buyer's market. Home numbers are increasing and buyer competition has decreased, but the conditions have not yet turned so that sellers worry about winning over their buyers. In fact, right now is a unique time when the real estate market approaches a balance between seller and buyer negotiation strength.
If you are ready to take advantage of this moment of calm, low competition, and growing options in the Washington DC housing market, First Savings Mortgage is ready to make it happen. Contact us today to discuss your budget and home buying plans.