3 Reasons Why 2022 will be a better Real Estate Market to Buy
Updated: Jan 12
During the Pandemic, the number one issue in housing is trying to find it. Inventory has been historically low for the past two years. Because of the low inventory, it has caused high prices across the country and unprecedented bidding wars.
There are signs that the upcoming year will bring some relief for homebuyers and balance to the real estate market. Here are three reasons why 2022 will be the year you will find either you next home or investment property.
End of COVID Forbearances - Since the beginning of the pandemic in March 2020, many lenders offered their customers a special provision that if their income was affected by COVID19 and they were not able to work, they can take a forbearance on their mortgage and not make payments until the pandemic was over, or whenever they were able to assume full time employment. Whichever came first.
As of September 2021, most lenders ended their COVID Forbearance plans and homeowners had to begin making their payments. The problem is that the homeowners were hit with paying the whole lump sum in one shot. If the homeowner did not work out a modification plan to put the lump sum payment on back of the loan, they will have to pay up all of the back payments in one shot (which can now be several tens of thousands of dollars) or face imminent foreclosure.
Because of this, delinquent homeowners that cannot catch up on their mortgage are putting their homes on the market to sell and risk a foreclosure. This is now adding new inventory to the market and motivated sellers.
Less Buyers With Extra Money in the Market - We have all heard about the open houses with bidding wars and buyers offering $20,000 above asking price. This was not only because of the low housing inventory, but there were also buyers flush with cash from stimulus money, unemployment lump sum checks, SBA loans, and even buyers who made a ton of money investing in crypto currency at the right time. These buyers, with all of this cash and time on hand, raised the prices of real estate and created unprecedented bidding wars.
Now that there is no more extra money being thrown around and the crypto market took a hit in 2021, there are less buyers in the market and prices are now starting to come down. Many real estate professionals lately have been saying that they have finally seen a correction and a balance in the market.
More New Home Construction - During the pandemic, it was nearly impossible for builders and contractors to get permits to start rehabbing homes because the municipality that issued the work permits were either closed or backed up. Naturally the permitting divisions across the country had to either close or work remotely because of the pandemic for a good part of 2020 and 2021.
Now that many of the housing departments are caught up, builders are working at a breakneck pace to get homes completed thus adding more inventory to the market. This is helping to meet the demand of homes needed for the market.
These are some of the factors that will make looking for your home a lot easier this year. Keep in mind mortgage interest rates are still historically low and may rise in the near future so don't wait.
Carl Agard is the Publisher and Editor in Chief of Boss XL Magazine and the Author of the new Book "Financially Surviving COVID19 (Finding Gems in the Real Estate Market)"