Welcome to 2022! For those of you thinking that we are stepping into a new year and a new real estate market as the calendar turns over, I would suggest that you instead gear up for more of the same from the past few years.
All signs point to the seller’s market continuing in 2022 that we have experienced here in Rochester, NY, and nationally too, for the past few years. Here are the top 5 market factors for 2022 to follow that could cause the market to change or contribute to making it stay the same:
Inflation can be a confusing topic, and without getting into an advanced economics lesson I would offer the summary to be that most necessary daily items that you have to purchase (gas, food, etc) are rising in cost and will lead to higher living expenses which in turn makes your dollar worth less. Will inflation start to take a grip on consumers to the point where major purchases such as buying a home become less practical financially?
If the Spring/Summer 2020 real estate market proved anything it would be that consumers & real estate professionals can adapt to whatever is thrown at them when needed. Before March 2020, collectively we had no idea that a global pandemic was around the corner and what that would lead to. If you looked at real estate statistics only, you would not think that the world has been experiencing what it has been in the last 2 years. Will the lingering pandemic throw the real estate market another curveball in 2022 that causes change or is the pandemic a moot point as far as real estate goes moving forward?
#3 Supply Chain Issues
These issues can be somewhat correlated to COVID and inflation. In regards to the real estate market, will supply chain issues cause delays and increase in pricing for materials needed to build new homes and upgrade existing homes, and will this be a factor that causes constraints in inventory available from home builders and investors that help supply the market?
#2 Listing Inventory
The seller’s market we have been in can simply be defined as the demand to purchase a home far outpacing the available supply of homes for sale to meet the demand. Statistically speaking, the available listing supply has not dropped off a cliff in recent years but more so the demand has increased so much that the supply can’t keep up. Will there be anything that causes listing inventory to increase in 2022 or will it be more of the same bottleneck issues?
#1 Interest Rates
It’s pretty much definitive that interest rates will be on the rise this year, and it has already started. How much will the rates increase and will the increase cause a reduction in home buyer demand or will we see little to no change at all?
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