Ready to sell your home? Unsure if it's a good time? Here are 7 predictions on how the housing marketing will be affected this year, according to SellWhenever.

1. Those with property to sell stand the most to gain.

More than any other factor, your local housing market is the biggest driver of your home’s value which can vary widley by region, state, town and even neighborhood. However, taking all the aggregate learnings from across the nation over the past year, real estate analysts can see a strong trend that benefits either buyers or sellers year to year.

This advantage – which we call either a Buyer’s, or Seller’s market depending on who it favors – can strongly impact the length of time it takes you to sell your home, the total number and quality of offers you get, and how much you’re able to sell for.

So what will 2022’s housing market be like? Forecasters predict another strong Seller’s Market in 2022. So let’s break down what that means, and what we’ve learned from that last few years that's informed those predictions.

Photo by Surface on Unsplash — Covid changed many's relationship to home, blending family and work. (Photo: Surface | Unsplash)

A global pandemic in 2020-21 upended the housing market, and its effects were felt all throughout last year. There were a few themes that stood out that signal what to expect in '22. For example:

People made some major lifestyle changes

Whether by force or by choice, lots of changes were afoot in 2021. We watched as record numbers of people got burned out, were let go, or left their jobs. We saw communities ravaged by another wave (or three) of the pandemic. And, we saw those who could afford it contemplate big moves and lifestyle changes they’d never considered in the Before Times.

Part of that was in reaction to the remote-work revolution where workers, untethered from their commutes and offices, sought flexible spaces at home in which to work.

Home equity grew in record numbers

When the pandemic hit, what few homes were on the market sold fast, went for top dollar, and inventory hasn’t been able to keep up ever since. Between August 2020 and August 2021, the price of homes appreciated 19.9%, a 12-month record and the 15th straight year of record highs. Homeowners increased their home equity by a whopping 56k on average, on average nationally last year (and yes, that’s a lot!)

This equity may have been fueled in part by the demand for second homes, which was up 91% last year over pre-pandemic levels. With all that equity, homeowners last year moved fast: more than 60% percent of homes went off the market within two weeks, more than half selling above list price (and up nearly 30% from a year earlier).

Low inventory means higher prices

With all those city-dwellers looking around the suburbs, however, the competition’s been fierce. New construction’s picked up, but only marginally so. The market’s still reeling from the shutdowns in 2020-21 that caused a construction backlog, leaving far fewer-than-expected newly built homes available for move-in.

Combine that with an army of urban office workers that no longer have to report in to, or commute to, an actual office… And there you have it: a major housing shortage. Single-family homes have been in high demand and this trend shows no signs of slowing down in 2022.

In other words, well-priced homes in good condition will continue to sell quickly in many markets. If you need a guaranteed quick sell, early 2022 could be your year.

"It's all 'bout that space, 'bout that space." - Everyone in 2020 (Adobe #15263498)

2. The 'burbs will stay in high-demand

What folks are looking for in a new home is to be expected based on what the last few years have dealt us, familiar even. That’s because it mirrors the shortlist for what many were looking for during the pandemic:

More square footage, indoors and out
A yard or outside area to be outdoors and/or entertain in
More flexible space to convert to home offices, studios, and remote learning hubs
More rooms with doors that close

Affordability of space is generally found in one increasing direction: from urban centers outward. Meaning, shoppers have been forced to look to the suburbs, and even more rural areas, for the kinds of homes that suit their needs and desires.

The number of shoppers looking specifically for suburban homes is 42% above pre-pandemic levels—with no indication of slowing down. Maybe that’s because the factors that fed this demand are still ever-present: uncertainty over the pandemic, an increased amount of time spent with family/household members, and a shift toward work independence.

This combination of factors, coupled with built-up equity from the pandemic, has afforded many the idea to relocate to a place without a commute, and more aligned with their dreams. Suburban home prices could rise even higher as a result.

"Home equity will continue to rise, just not as much, or as fast as last year.” - SellWhenever

3. Home prices will rise, but at a slower rate

Not only will homes go fast in 2022, but they could also go for more than they’re worth. The number of home shoppers in both urban and suburban areas remains more than 40% above pre-pandemic levels, spurring on the demand that’s causing prices to rise.

Though at nowhere near last year’s gains, experts say. Still, sales of existing homes could rise 6.6% this year (and some say as high as 11% in some markets), which would be the second-highest sales year in the past 15 (surpassed only by 2021).

While prices aren’t expected to climb as high or as fast as they did in 2021, suburban single-family homes will stay in particularly high demand, as workers continue to seek remote, and flexible work-from-home options. In other words, it’s stiff competition if you’re buying outside the city, but if you’re selling? Demand’s hot.

Seller's stand to gain in many local markets, such as in suburban centers. (Adobe #222310072)

4. Investors may back off, leaving more room for FTHBs

Another prediction for 2022, is that despite the uncertainty of the pandemic, more than 45 million younger adults between the ages of 26-35 will be looking to buy their first home in 2022. Luckily, market conditions are such that things might turn slightly more in their favor.

As promised by the Federal Reserve, mortgage interest rates will see steady increases in 2022 with the first due in March. Investors dislike rate increases; therefore, it’s likely we’ll see at least some start to take a step back. Considering that last year, nearly one in five homes were bought by an investor, this should leave a little more room for newcomers in a less frenzied, intense marketplace.

Speaking to a knowledgeable agent can help you maximize your benefits (Adobe #3229359373)

In part due to the suburban demand leaving a vacuum in urban centers. In turn, this might offer more affordable housing opportunities for first-timers in more densely populated towns and cities.

At the same time, higher interest rates are making refinancing slightly less attractive for investors and homeowners. Those who missed out on refinancing last year, for example, may decide to sell this year instead. This marginal but real bump in inventory can mean all the difference to those aiming to get into the market while the lending’s good.

5. Interest rates will rise (but remain historically low)

In relative terms, it actually still is. Good, that is. In spite of their promised rise, mortgage and refinancing rates in the 3-4% range are still lower than almost any other time in history. Meaning, for those looking to buy, it’s still a great time to borrow.

No doubt there will still be much competition for homes, and first-time buyers will face affordability and inventory challenges. But you can expect that homes at entry-level prices (usually the lower third of all home sale prices in an area) are at least likely to see lots of activity from first-time homebuyers who, in 2022, will still need all the help they can get.

"Rates are going to rise, but remain historically low." - SellWhenever (Adobe # 3861575415)

Another prediction? That a tough marketplace for Buyers could make 'smartsizing' a good move for all.

6. 'Smartsizing' will be on the rise

There are lots of reasons to move or sell. But for those looking to play in real estate game this year, 2022 brings less-than-normal market conditions. While the market favors sellers who act quickly, your own ability to purchase a home could be equally affected by short supply and inflated pricing – making this a challenging balancing act.

The decision whether to buy or sell should never be based solely on mortgage rate numbers, or home prices. Above all, they should be based on your unique financial, and familial circumstances. Which is why your personal reasons factor in a lot this year.

For those who want to sell but find it hard to buy at their price point right now, changes to your lifestyle could offer a smart, cost-effective solution. Such as

Downsizing to a smaller home for affordability reasons
Relocating for tax benefits, or cost of living savings
Temporarily moving in with a loved one, or having a family member(s) move in with you to save money
Renting or subleasing part of your property to earn money
Living a more simplistic or transient lifestyle due to remote work opportunities, travel, or other circumstances such as those living a #Vanlife, #RVlife, #Tinyhouses, #SmallHouseLiving lifestyle
Moving into a specialized living or retirement community for social benefits, or for health/safety reasons.

There are a wide variety of reasons people decide to move into smaller or more affordable homes. If you’re looking to buy at the same time you sell, think of this as an option for buyers facing stiff competition, and inflated home prices.

Small improvements can make a big impact when it comes time to sell. (Adobe #284944248)

before any big financial move. For example, does your home need any improvement or repair?

Small repairs can return big ROI this year

Counter to the advice you might get in a Buyer’s market, in 2022 your house is in high demand. You may not need to put as much work or expense into your home in order to attract buyers as you do when the market’s flooded with inventory.

So you might decide, wisely, to forego the larger renovations and cosmetic changes you thought would be necessary to sell in other years. In 2022 you might let a buyer decide what’s important to them or not, before striking a deal.

However, you can also make upgrades with the sole intention of increasing a home’s value—setting you up for a maximum return on your investment (ROI), even if you won’t be ready to sell for years down the line.

These are primarily small, strategic upgrades around the home that are attractive and valuable to the typical buyer in your area and price point.

To earn a profit off what you invest into these small (let’s face it, mostly DIY) projects. For various improvements around the home you have the potential to earn back thousands of dollars over what you spent on the improvement when you go and sell your home.

Your homeowner’s (ROI) is the value you earn on your home over what you spent to purchase it. You can maximize this investment benefit by doing cost-effective upgrades such as small, DIY-friendly projects that meet at the intersection of low-cost, and buyer appeal. Projects like

Landscaping
Replacing doors & windows
Painting
Replacing tile, backsplashes, flooring, or moulding

These are all examples of high ROI projects. And one way to get projects like that done, is with simple sweat equity. I.e., the labor you put into a project yourself to save on costs, coupled with smart decisions about when to hire a professional.

Sweat equity can go a long way in reaping high home ROI. (Photo: Thayran Melo | Unsplash)

When planning, use the help of a professional realtor to help you prioritize the projects that will have the most impact on your bottom-line. But also choose projects that are about both value and preference.

Not only is central AC not “worth” what is in Washington state as it is in Texas, what’s valuable to one homeowner, isn't the same as to another. Your best guesses and intuitions about a home are usually right and are always your best guiding light.

But, so are the hard costs and time restraints that protect your ROI. So pay close attention, and focus on these key areas which will help increase your home’s value:

Updated Kitchen/Bathrooms: These are the most important rooms for improving ROI; upgrade the appliances, replace sinks and countertops (you could even knock out an unnecessary wall to open up your floor plan.
Cosmetic Upgrades: Remove unsightly flooring and carpets, or upgrade to hardwood, replace popcorn ceilings, paint interior rooms, and/or get new doors and windows.
Curb Appeal: Never underestimate the power of a great first impression; replace your garage door, repave the patio or driveway, paint the exterior, add landscaping, and/or a front walkway.
Energy-efficiency: Energy-efficient homes are in high demand: look for efficiencies in lighting, appliances, insulation, and windows.
Square Footage: The amount of usable square footage goes directly into how much your property is worth: look for creative but affordable ways of increasing it like finishing a basement, or closing in and finishing a garage or outbuilding.
Tech Upgrades: Two-thirds of home buyers prefer homes with smart products installed such as thermostats, cameras, fire detectors, locks, and lighting systems – high impact features for Buyers at relatively little cost to homeowners looking to sell (over other major renovations or improvements)

These are the sort of features home buyers in 2022 are looking for — that won’t break the bank or change your position at the negotiating table with Buyers. With the advantage of a seller’s market behind you, homeowners are lucky choose projects that aren’t just obligatory but fun and valuable too.

Read more about home improvement in our guide, Home Upgrades to Max your Home’s ROI.

Make a budget and timeline for your home repairs so you can spread them out over time. (Unsplash) — Make a budget & timeline so you can spread repairs out over time. Photo: Estée Janssens | Unsplash

Final Thoughts

Experts predict that rising interest rates will start to balance the market, while the remote-work revolution has opened up new opportunities to relocate. This shift in the culture, nd in the marketplace, is expected to continue into 2022 and beyond. In other words, demand is high, prices are peaking, and so all told, if you’re in a position to sell a home in 2022, it’s a superb time.

At SellWhenever, we have a variety of additional content. When you visit our website, you can find our blog, where you can learn when the best time to sell your home in 2022 is and more.

Sarah A. Lybrand

Will 2022 Be a Buyer’s or Seller’s Market? (7 Predictions)