Happy Memorial Day Weekend!
This weekend we’ll be (enjoying the sunshine, spending time with our friends and family, and actually turning off our phones for a minute. We love a long weekend every now and then!)
And we particularly love Memorial Day weekend because it feels like the official kickoff of summer. Like the first half of the year is behind us, and now we’re chasing our year-end goals from here out!
That got us thinking… we were going to wait until the actual halfway point of 2022 to revisit our January predictions, but the market has been shifting so much lately, so why wait?? Knowing what’s coming up on the horizon, especially when we’re in a turbulent time, gives you an enormous competitive edge in this industry and shows your clients why you’re the best.
Looking back: Grading our boldest 2022 predictions
Source: Unsplash
If there’s one word we’d use to describe the housing market this year, it would be accelerated. Everything happened so fast. Inflation grew like wildfire. Interest rates zoomed upwards. Prices have run rampant. Rent is through the roof. Even this latest shift towards a cooler market and more inventory has happened in a flash. In short, this industry isn’t messing around!
With that background, let’s take a look at seven market predictions we made in December and January and see how they stacked up:
Accuracy: We were close!
Our take: Back then, rates had barely passed 3%. We were right on the direction, but rates grew even faster than we predicted. The rate for the 30 year fixed mortgage went above 5% in April of 2022.
2) Inflation will likely peak at 5% midyear, then taper down to 3% by the end of 2022
Accuracy: Pretty close!
Our take: We nailed the direction but underestimated the excessive growth. Even though our forecast of 5% at midyear was more accurate than the consensus at the time, as with interest rates, inflation absolutely outpaced everyone’s predictions when it hit 8%.
3) Expect a record number of fresh listings, but still not enough to feed demand
Accuracy: Nailed it!
Our take: This prediction is playing out so accurately, we couldn’t have scripted it better. Inventory is trending upwards, but it’s just not enough to fill the supply gap of 5.8M homes.
4) Home prices will keep rising, but not as steeply as in 2021
Accuracy: Bingo!
Our take: This is exactly what has been happening in the market over the past couple of months. Prices are up 15.9% YoY compared to last year’s growth of 18%.
5) Rental rates will increase 7% by the end of the year
Accuracy: Not too shabby!
Our take: As of April, rent is up 11.3% YoY. Again, we expected a significant increase, but the market just went above and beyond it!
6) Expensive single-family home prices will encourage more buyers to look for condos or townhomes
Accuracy: Bullseye!
Our take: Townhomes are the most competitive type of property on the market now. They’re more affordable, urban, and walkable, and buyers are going wild for them.
7) iBuyers will focus on perfecting a niche service instead of market dominance
Accuracy: The jury is still out
Our take: iBuying is working out for some companies and not for others (*cough* Zillow), but it’s too soon to tell how dominant iBuying will be in the market.
Looking ahead: Our predictions for the rest of 2022
Source: Unsplash
So our predictions were pretty spot on for the first half of the year, though conditions changed faster than we expected. So for what it’s worth (which we believe is a lot 😉 ) check out our three biggest predictions for the remainder of this interesting year:
1) We haven’t seen the worst of interest rates yet
Our take: The Fed is likely to bump up interest rates by 50 basis points (at least!) at almost every meeting they have this year. Even with the Fed pumping the brakes on our economy, we expect inflation to be somewhere around 5-8% by year end.
2) Mortgage rates are going to remain around where they are or increase
Our take: We wouldn’t be surprised if rates hit 6% by December. There’s no way they’ll be below 3.5% again this year, unless something absolutely massive happens. We’ve said it before and we’ll say it again, if you don’t want to pay a fortune in mortgage payments, your buyers must lock in their rates NOW.
3) Expect home sales to level off nationwide
Our take: Prices and interest rates are just too high for a lot of buyers, and that will keep a lot of people out of the market. While we don’t expect home prices to rise at the same staggering rate, we do believe they will continue to rise this year, especially in the hottest markets, since demand is still there and rental rates are rising too.
Summary
In short, there are still incredible opportunities out there for the agent who’s knowledgeable, equipped, hungry, and an avid Blueprint reader in 2022. But it’s not going to be like 2021, when homes barely even touched the market before the bidding war started.
What did you think of our predictions? Forward them to a friend or colleague! The more agents who know how to navigate a market, the better this industry becomes.
Have a great long weekend and we will see you Tuesday!
-James and David
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