Real Estate Analysis Buyer’s Market or Seller’s Market in the US 2022 by Jim Blessed February 5, 2022February 7, 2022 by Jim Blessed February 5, 2022February 7, 2022 If you’re interested in committing to a property this year, there are questions you must ask yourself, and at the top of the list: Is the 2022 US housing market a buyer’s market or a seller’s market? Arming yourself with the right answer to this question is the first step towards real estate investing this year. As real estate investors, before delving into the 2022 US housing market, you must perform a real estate market analysis. Before looking at predictions for the real estate market this year, we must first examine the housing market of 2021. In this article, we’re going to take a deep dive into the factors that will help answer the question of whether or not this is a buyer’s market or a seller’s market. Before we go further, what is a buyer vs. seller market? Buyer’s Market Simply put, a buyer’s market is a market that favors buyers. It means that buyers have the advantage in a buyer’s market than they would in a seller’s market. In a buyer’s market, there are more houses on the market than there are buyers. This benefits the buyers both in terms of cost and competition. Seller’s Market From the name, a seller’s market is a market that favors sellers. It means there are more buyers available than there are properties. This benefits the sellers as it gives them higher pricing power. In a seller’s market, properties go for higher than they normally would because low supply hits high demand. According to CNN, 2021 was an interesting year for real estate as an estimated six million homes were sold, and home sales are predicted to reach new highs this year. If you’re buying a home, this may not be good news for you. 2021 was an incredible year for homeowners as prices of homes saw an increase of over 20%. In some locations around the US, the price increase was double that. It would be correct to declare that 2021 was a seller’s market from the information above. It was a different turn of events for buyers in this market who are looking to buy their first homes or investors looking to add to their real estate portfolio. The competition for real estate was fierce, with home prices rising to unimaginable levels. While mortgage rates were at record lows, finding a home to buy was a near-impossible task. Before deciding if 2022 is a buyer’s market or a seller’s market, these are the factors that must be considered before the conclusion is made. Buyer’s Market vs. Seller’s Market? Factors to Consider Is it a seller’s market right now, or is it a buyer’s market? Make sure to consider several factors first before coming to a conclusion. In this section of this article, with the aid of insight from the 2021 housing market, we will discuss our expectations for the 2022 housing market to determine if this is a seller’s or a buyer’s market. Mortgage Rates Have Risen from 2021 Lows According to data from YCharts, 2021 saw the lowest interest rates on record, with the average mortgage rates for a 30-year fixed mortgage at 2.65%. This didn’t last long, as, on April 1, mortgage interest rates had peaked at 3.18%. For the rest of 2021, mortgage interest rates remained between 2.7%-3.1%. As of January 6, 2022, the mortgage interest rate for a 30-year fixed interest rate was at a record 3.22%. If this is anything, it’s an indication that mortgage interest rates for 2022 will continue to move even higher. The Federal Reserve has stated that it will be winding down its pandemic monetary policy as it aims to rein in inflation. This, coupled with the mortgage interest rates we’ve seen for 2022, further solidifies that interest rates will be pushed higher this year. Competition for Inventory Will be Fierce While more properties are expected to be available this year, the number of home buyers and investors is projected to rise. This will further drive competition up and make the purchase of homes even more competitive than it was last year. While the number of buyers on the market is expected to grow this year, according to Realtor.com’s forecast, inventory and available properties are only predicted to grow by 0.3%. In October 2021, properties priced $500,000 and below were down by 2%; there simply weren’t enough homes to meet the rising demand. Also, properties priced between $500,000 to $750,000 saw an increase of 18%, and properties priced at $1 million and above went up by 31%. Sellers benefited the most from the competition in the market last year as investors and buyers bid outrageous sums for homes that weren’t usually worth as much. Some buyers went as far as paying off other interested parties and making all-cash purchases. Property Prices Will Continue Their Upward Trend According to the U.S. Census Bureau, in 2021, property prices rose in most locations. By November, existing-home prices had reached a median of $353,900. From a year ago, this median price of properties rose 13.9%. Also, the median price of newly constructed homes was $416,900, up 19% from the previous year. While 2022 isn’t predicted to experience such double-digit astronomical gains, property prices are still expected to continue their upward trend but at a much slower pace. New Investors and First Time Buyers Will Face Challenges With the stiff competition and the continuation of all-cash offers on properties, first-time buyers and new investors who have hopes of making money in real estate will experience difficulties in making a purchase. As of the end of 2021, the number of first-time homebuyers in the market had fallen to 26% from its 32% standpoint a year ago. This is also the lowest percentage of first-time homebuyers since the National Association of Realtors began tracking first-time buyers in 2008. Regardless of the stiff competition, many say they’ll be back in the spring, armed with the knowledge they gained from the previous year. Buyer’s Market vs. Seller’s Market? Several Factors Must Be Considered Will 2022 Be a Buyer’s Market or a Seller’s Market? The Verdict To give a summary of the points listed above: Mortgage rates have risen from 2021 lows Competition for inventory will be fierce Property prices will continue their upward trend New investors and first-time buyers to face challenges After considering all of these points, is this a buyer’s market? The simple answer is No. The verdict of the conclusion drawn from the real estate market analysis is: The year 2022 will be a seller’s market. In 2022, the sellers are expected to have the upper hand in the real estate market. So, if you’re a seller, 2022 will be favorable for you. If you’re an investor or a buyer, all hope is not lost. There are ways to navigate a seller’s market that still ensures you get a good deal and acquire a property that guarantees a positive cash flow. Must-Have Tips for Navigating a Seller’s Market Will it be a buyer’s market anytime soon? Judging from the current statistics, it is unlikely to be a buyer’s market anytime soon. The fact that the verdict of the real estate market analysis declares 2022 a seller’s market does not mean you should wait around before getting a property. Before going further, please remember that this is the real estate market analysis is for the entire United States. This means some local markets may have different results, and as an investor looking to get a property with good cash on cash return, these are the markets you should focus on. Below, we’re going to discuss everything you need to know to get a good deal in a seller’s market. Understand You’re in a Seller’s Market When trying to get a property in a market, the first thing to note is that you’re in a seller’s market. Arming yourself with this information will go a long way in helping you prepare a strategy that helps your aim. There are different ways to determine the kind of market you’re in. One of the best ways is to use a market absorption rate calculator. The calculator essentially tells you how long it usually takes to sell a home in a given area. If the number is low, then it is a seller’s market. Look for a Buyer’s Market As a real estate investor, you’re not limited by location. Hence, while you can buy a property in a seller’s market, it would be more advantageous to you to look for properties in a buyer’s market. Make Your Best Offer Immediately After Finding a Suitable Property It is a normal strategy to go back and forth in a buyer’s market before making your best and final offer. This is not advisable in a seller’s market as several potential investors usually bid on the same property. Before placing an offer, make sure to conduct a thorough comparative market analysis on the property that piques your interest. This way, you know your offer is reasonable for the property. Mashvisor provides investors with the tools needed to perform comparative market analysis at the neighborhood level. Also, you can use the platform to look at similar listings or recently sold properties in the area to compare prices. Sign up for a free trial on Mashvisor now! It is also important to note that there are no counteroffers in a seller’s market. This is because there are often multiple offers for the same property. This is why it is emphasized that you do not lowball your offers. Be Prepared to Bid While you may have made your best offer upfront in a seller’s market, it is important to remember that this may still not get you the property. That said, if it’s a property you’re interested in, you may have to go a bit higher than your best offer. Offer Cash As said earlier in this article, a seller’s market prompts buyers to make their offers in cash. As such, you should also be ready to make an offer in cash. This translates to the seller that you’re serious about the property. To further stack the odds in your favor, you may want to consider topping the earnest money deposit in the area. This means if a high earnest money deposit in the area is $25,000, consider increasing it by 25% to 50%. Offer More Non-Price Considerations If you’re unable to match the best offers for the property, you may want to consider looking at other non-price factors. If you provide some non-price factors that can speed up the transaction, also known as contingencies, the seller may accept your offer over other offers with more contingencies. Some of these contingencies include: waiving the financing contingency, reducing the inspection periods, and depositing larger earnest money deposits. In some seller’s markets, a property might go for a lower offer with stronger non-price options. This is because the more contingencies in an offer, the more likely a seller will reject the offer. Another consideration a buyer can offer is to be flexible with the deadline on the contract. As a result, this gives the current occupants more time to move out. Work with a Real Estate Agent Working with a real estate agent in a seller’s market provides better odds for you. The real estate agent can help you navigate the treacherous waters of a seller’s market and guide you through making your offer. Conduct an Extensive ROI Analysis Regardless of the market you’re investing in, conducting a thorough real estate analysis is important. The goal of any investor is to get a property with a good ROI. Hence, before committing to a property, make sure the ROI on that property is high. Conclusion Navigating the 2022 US housing market can be an intimidating affair, particularly after we’ve come to the conclusion that this year will be a seller’s market. However, it is relatively more achievable with the right information. If you’re unsure how to get started investing in a property in a seller’s market, start with Mashvisor. Start Your Investment Property Search! START FREE TRIAL Buyers MarketMarket AnalysisProperty PricesSellers Market 0 FacebookTwitterGoogle +PinterestLinkedin Jim Blessed Jim Blessed is a versatile writer and content marketer with extensive experience covering the US housing market. He has a particular knack for providing in-depth market reports that help investors make smarter decisions. Previous Post Colorado Housing Market Forecast 2022 Next Post The 10 Best Places for Buying a Vacation Home in 2022 Related Posts PropStream vs Flipster: Which Is Better for Real Estate Investors? Three Ways to Find Real Estate Comps Roofstock Reviews: Is the Platform Helpful to Real Estate Investors? Our Guide on How to Evaluate a Multi Family Investment Property Here’s How to Analyze Foreclosures for Sale for Investment How to Differentiate Between a Buyer’s Market and a Seller’s Market in Real Estate Learn How Much Cash Flow Is Good for Rental Property The Beginner’s Guide: How to Calculate Equity in Real Estate How Should You Use Real Estate Analytics to Your Advantage as an Investor? This Is How to Calculate Rental Yield Beyond Pricing vs PriceLabs vs AirDNA vs Mashvisor: The Best Airbnb Data Platform in 2022 Airbnb Analytics: How Investors Stay Ahead of the Competition Leave a Comment Cancel Reply Save my name, email, and website in this browser for the next time I comment.