Strong buyer demand is likely to drive up sale prices in 2022, despite an easing of tight inventories in many U.S. markets, according to a new report from Berkshire Hathaway HomeServices (BHHS). The “2022 Real Estate Report” highlights U.S. market trends such as buyers’ changing priorities, inventory and material supply issues.
“This year, we expect fewer units to be sold nationally, but because of price appreciation, the transaction volume should be about the same as last year,” says Christy Budnick, chief executive officer of Berkshire Hathaway HomeServices. “We are also seeing inventory levels tick up slightly in suburban and luxury markets, along with fewer multiple offers.”
To capitalize on the “new normal” U.S. market, brokers need to focus on their relationships with agents, affiliated professionals and consumers, says Budnick. “Sellers want to be sure they are getting top dollar, while buyers want the highest level of representation to negotiate a fair price,” she says. “You need to be sure your sphere of influence knows that your team is here to help them.”
While many brokers and agents are focusing on serving Millennial and GenZ clients, don’t forget about the Boomer generation, says Budnick. “Brokers have an opportunity to help these owners get comfortable with selling their properties, and showing them choices on the other side,” she says.
Brokers can also be problem solvers, helping their agents address challenges facing their customers. For instance, labor shortages and global supply chain problems have made it more difficult for owners to prepare their homes for sale and for buyers to renovate or remodel their new properties. That creates an opportunity for brokers to partner with contractors and suppliers in their market or to offer home warranties, Budnick says. “Be sure to stay in touch with construction professionals and make them part of your network,” she adds.
While the pandemic accelerated a migration from urban to suburban locations, the pendulum is now swinging in the other direction – at least for some big-city markets. Budnick says sales in Boston, Chicago and New York City have returned to pre-COVID levels. “Boston has experienced a strong resurgence, with an increase in closed units and an overall price increase,” Budnick says. “That speaks a lot to the desirability of city life.”
On the other hand, secondary markets in scenic locations, including Florida, upstate New and New England continue to draw buyers who can work remotely or are ready to retire, Budnick says. Many Millennials who purchased condos or townhomes in urban areas are now ready to move to the suburbs – particularly those with young families.
“Tax consequences also come into play, as states like Arizona, Nevada and Florida will attract buyers from high-tax locations,” Budnick says. “But brokers should continue to focus on lifestyle, because that is so important when making buying decisions.”
Budnick expects mortgage rates to inch up slightly this year, but not enough to knock most buyers out of the market. Instead, they may make an all-cash offer or incorporate a larger downpayment.
Buyers today are less concerned about “smart” or “green” homes than in the past. Recognizing the inventory shortage, they are willing to purchase a “light fixer-upper,” rather than seeking home with all the energy-saving and high-tech features, Budnick says.
Because the U.S. as a whole will still be in a seller’s market this year, Budnick doesn’t expect to see much growth in the ibuyer segment. While some owners will want an immediate sale, regardless of price, most are willing to wait, especially in markets where inventory is scare and multiple offers are common. However, institutional buyers will compete with individuals for lower-priced homes that could generate rental income.
Finally, Budnick expects international buyers to play a bigger role in U.S. markets this year as travel restrictions decline. “But don’t forget about outbound buyers,” she adds. “Cultivate your referral relationships in global markets popular with retirees and remote workers.”