8.4% Home Price Appreciation in 2022? - Houses to Homes Podcast
It's a weird real estate world this year and things are changing fast. We have to pivot, adapt and shift strategies to keep up – which is what Laura and Kristi talk about in this episode. Home price appreciation, what adjustments we have to make now and how it's different for home buyers and sellers here in mid-2022.
So, Kristi, everybody is in fear that the market’s heading to crash. What do you think about that?
I think that people need to stop running around with their umbrellas thinking the sky is falling. We're not headed for a crash. What we're experiencing right now is very much a correction, but not a crash.
Why isn't going to crash?
Because we still have too much of a supply and demand issue. A normal, healthy market is a six month inventory of homes on the market for sale ready to buy.
What do we have today? We have less than two months.
Yeah, I think we're at like 1.6 or 1.8 in Livingston County.
So we are still far from even a normal market, let alone a suffering or a buyer's market.
So low inventory. I mean, it's got to be great for sellers.
It is. It is. But it is starting to slow down a little bit. And that's the one thing that sellers have to keep in mind when getting ready to sell their house. You know, this time last year, if we put a house on the market on Wednesday, very likely we were going to have multiple offers. You know, there's houses I had 20, 25 offers in a weekend and hundreds of people coming in. You know, those days are yesterday.
Today's day is, you know, if we put a house on the market and, you know, the seller listens to us and stages it properly, we price it properly. We'll probably have a handful of offers after a week.
What do you think was the biggest change? Like what pivoted that? Because it seemed like it happened like in a matter of like a month from May to June, almost.
Kind of did. Yeah. I think the biggest reason is because of the rise in interest rates. So what it did is a lot of the buyers who were just entering into the buying pool got pulled back out. They got out-priced from home affordability ’cause the interest rate was kind of double if they were looking at 3%. Now it's upwards of five and a half percent. So now their payments doubled. So.
So a lot of the, you know, first time homebuyers who may have been buying a $250k to $300k price range are now, you know, looking at their pre-approval, going, that's not what I'm approved for now. Now I can buy $150k to $200k. And it's not the type of home I want.
So it took out a lot of buyers from the buying pool. But what it did create is an urgency with the existing buyers to take advantage of the interest rates before they go even higher.
And it's given them a more optimistic viewpoint, in my opinion, because now they actually have a day or two to get into a house, not hours to get into a house.
Right. Yeah. It seems like, you know, buyers now can kind of, you know, take a step back, actually look at the house, actually take a minute. I had one couple that came back through a second time on one of my listings. You know, they brought the contractors back in. So you're right. I think I'm seeing from a buyer perspective that buyers have a little bit more flexibility, a little bit more, you know, before it was like you had to give away almost your first born to get a house.
Think of last summer. How many times did you write an offer sitting in the parking or the driveway of the house that you showed? Or maybe even inside the house?
You know, we actually have time now to get back to our office and comp the property and do research on it. And the buyers have time to talk to their spouse or their significant other and make sure it's the decision that they want to make. You know, one of the things that I was seeing last year that buyers couldn't do was buying and selling at the same time.
It was so difficult. And now I'm seeing a lot more offers that are contingent on the sale of a property. Which kind of, to your point, kind of hearkens back to the way it was back in 2019, you know. Back in more of a normal inventory time, right?
So, you know, buying and selling at the same time and writing an offer that is contingent on the sale of your house, you actually have a shot.
Somebody’s not gonna laugh you off the table with that. Offers are given serious consideration.
Yeah, it's definitely made the playing field a little bit more level.
It's still very much a seller's market, and for the most part, sellers do have the upper hand, but the scene is changing. And, you know, I think it's becoming a lot better place for home buyers to be in the next couple of months.
And, you know what’s crazy, too, is that we're still seeing home values are up.
Yes. That that just blows my mind.
But, you know,
I just read an article through the National Association of Realtors, and they were saying that Realtor.com just did their 2022 reforecast of the market, and they're estimating an 8.4% home appreciation in 2022.
Still. So while people you know, we have all the Chicken Littles in the world saying that the sky is falling, it's not. Interest rates are rising, but so is home appreciation.
What's declining is home affordability because of the interest rates. And that's why buyers really need to take advantage of the situation today.
Yeah, and that's a good point. And that's kind of a good way to sum it up.
And then our sellers, you know, they're going to have a little bit of an attitude adjustment.
And as agents, we are, too.
You know, for sure, our job and our seller's job is going to become harder. You know, our sellers are going to have to be a little bit more proactive when they get ready to list a house. And we have to have a lot more conversations with our sellers that we, you know, may not necessarily like to have.
Well, and I think, too, you gotta pull out all your marketing gear now.
You know where last year it was like you didn't have time to do an open house because it was barely on the market.
You know, you barely had time to do any advertising or door knocking or anything like that. And now there's time to do that.
Right. There's time to do that and then the homes that are, again, prepped and ready, they're still selling with multiple offers and they're still for over list price.
Sure, no doubt.
You know, again, even though we're talking that things are stabilizing, over 50% of the homes still had received offers over list price last month.
Okay. All right.
So it's still out there. It's just not the frenzy that it was. And we have to look at those 50% that sold for over [list price] or had offers over list price. What they look like. What do they look like and how are they priced? We can't price like we were in May of 2021, when the neighbor's house sold for $300k so we listed your house at $310k and we'd get $320k or $330k, $340k for it, right now we want to when we're pricing houses, we have to be more realistic.
The homes in the area sold for $300k. We're going to price your house for $300k. We're going to make sure we have a fresh coat of paint or we're going to make sure that it doesn't smell like your little four-legged best friend. We're going to make sure that the lawn is landscaped and we have some curb appeal. We're going to make sure that we do the open house and we do the marketing and we get your house out to the masses to pull that in. Because the neighbor down the street from you who's who has their house listed for $320k, they're going to sit on the market and we're going to get your house sold because we're going back to the old school basics of real estate, right? That's what we've been trained to do. That's what we do and that's what we do best.
Yeah. It's kind of nice not to have to do it through a fire hose like we were last year.
Absolutely. Well, and one of the things that I missed about last year is because everything was so rapid fire, we lost a lot of the relationship building with our clients.
Yeah, good point.
Which is what this company was built on, which is why I love it. That's 100% why I wanted to do this, is to get back to the relationships and the family. Buying is a very emotional thing. Selling is an emotional thing.
And, you know, now everybody has that chance to really breathe.
Agents, home buyers, home sellers. It's giving us a really good readjustment.
Yeah. Sounds good.
Thank you, Kristi.
Yeah, no problem. I think that's the biggest thing is just people want to know what's going on. I just, the fear is out there, but if you really kind of take a step back and look at it and you take a look at the economics and everything else that's going on, it really, you know, it's still a good time to buy and it's still a good time to sell.
I get buyers need homes sellers get job changes, they move, life circumstances change. It’s all doing what's best for you.
All right. Well, thank you very much for meeting me today.
Yeah. Thank you, Kristi.