For those who are debating on selling their home, there may never be a better time than 2022. The seller’s market we have seen the past few months does not look to change anytime soon. When selling your home, you always dream of a market like this. This market is full of buyers, lacks sellers, and has never been so active. Housing has never been at a lower inventory historically, and 2022 hasn’t brought much reprieve in terms of inventory. With maximum leverage as the seller, there has never been a better seller’s opportunity. This is what has caused sellers the opportunity of a lifetime.
Demand Is Very Strong
The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows that there were 6.18 million homes sold throughout 2021. This was the most homes sold in over a decade. In fact, this is the highest number of sales in 15 years. Lawrence Yun, Chief Economist for NAR, continues by telling us:
“Sales for the entire year finished strong, reaching the highest annual level since 2006. . . . With mortgage rates expected to rise in 2022, it’s likely that a portion of December buyers were intent on avoiding the inevitable rate increases.”
As demand isn’t expected to weaken, even with higher mortgage rates, the real estate market looks to remain tight. In fact, many people have began looking into real estate as a hedge against inflation that is running at the highest level we have seen in forty years. There are expert predictions for the housing market in 2022 as well, and they do not favor buyers whatsoever. In fact, the Mortgage Finance Forecast, estimates that home sales in 2022 will actually increase again. The report calls for another 6.4 home sales at an annualized rate. This is higher than 2021, as many experts expert some sort of inventory uptick that will lead to more home sales. With home sales continuing to forecast higher, the seller’s opportunity does not look to be ending.
Supply Problems Lead To Seller’s Opportunity
From same report that was mentioned above, NAR reveals that inventory is at a record low. In less than a month, with the current demand in the market, all inventory would be fully absorbed. In December 2021, there was the least amount of homes for sale ever. This is cause for concern for buyers, but cause for great seller’s opportunity.
“Total housing inventory at the end of December amounted to 910,000 units, down 18% from November and down 14.2% from one year ago (1.06 million). Unsold inventory sits at a 1.8-month supply at the present sales pace, down from 2.1 months in November and from 1.9 months in December 2020.”
While real estate is seasonal, and inventory typical does decrease in December, demand is not normally this high. This December was different than past years, and shows that demand has almost fully taken over the supply side of the market. With this economic principle, it is safe to say that home prices will increase alongside mortgage rates.
Seller’s Have Leverage
With strong demand and low supply, people are willing to give up a lot less when looking to offload their assets. Sellers, in this scenario, are receiving many offers and some with no contingencies. To a seller, an offer that is fully financed, and lacks the inspection contingencies, is more attractive. Homeowners who are debating on selling may never have a better upper-hand than they do right now. While demand remains above historic averages, inventory will remain low. When inventory is this low, you have leverage in every sense of the world. The seller has options, which is not always the case. However, this has been exactly how it has been playing out in the real estate market the past few years. Sellers have all the power, and buyers are at their mercy.