There is no question that 2021 was an exciting year in the real estate market. Overall home prices were up 12% in Whitefish Bay according to the Multiple Listing Service (MLS). That’s the highest single-year value increase in my 24 years as a Realtor. Many homeowners sold their home in days and achieved prices above their asking price. It’s great news for all of us Whitefish Bay homeowners!
The “exuberance” of 2021 was driven by the convergence of 2 key factors:
· Low inventory – the number of folks moving is historically low.
· High buyer demand – driven by low interest rates and a strong stock market.
Enter 2022 with persistently low inventory, climbing interest rates, rising inflation, covid uncertainty, and more employers making work from home a legitimate option. How will these factors impact prices this year? It’s hard to say. For example, one might think that higher interest rates will take buyers out of the market. Alternatively, the opposite might happen. Even more buyers might want to lock-in a great rate before the cost of money goes even higher.
That’s just one paradox of this market. Just when you think prices can’t get any higher - they do. And just when you might think any home, at any price, in any condition will sell - it doesn’t. The truth is no one is quite certain what the market is going to do in 2022. Our crystal balls are a bit foggy!
A panel of economists gathered by the National Association of Realtors predicts that price appreciation will taper to 5.7%, interest rates will continue to rise above 4%, and inflation will ease. So, what does that mean for you and me? I say, not too much.
While economic conditions are important, I recommend that real estate decisions should be made based on what’s happening in your life. Real estate decisions should be governed by life events. Getting married, having more children, getting a job promotion, retiring, upsizing, downsizing, right sizing, etc. That’s what should influence the decision to either buy or sell. Making the right life decision matters far more than the current interest rate.
There is no question that the playing field is currently tipped to the advantage of sellers. But a word of caution if you’re getting ready to sell your home this spring. Buyers are smart, informed, and selective. Despite it being a strong seller’s market, you must still prepare the right way, price correctly, and be strategic about how your home is positioned relative to your competition. Get these things right and you’ll have great success. Miscalculate and you might miss a wonderful opportunity to maximize the selling price. A good Realtor will coach you the right way.