It's so funny that 90% of the time before someone asks me what is going to happen with the market in the coming year, they precede it with a statement to the effect of, "I know you can't really know for sure, but..."
The "but" is that they still want to hear my predictions, which I must emphasize are really only educated guesses, since the real estate market -- like the stock market, like the weather -- often surprises us all.
Case in point: on March 16, 2020, when Governor Baker declared a COVID lock down, I certainly didn't anticipate that my business that year would actually go UP by 25%. Even though, on that day, none of us realized the pandemic was going to be a long-term problem, I remember thinking, "Well, I'm glad I had a busy January and February at least." Seriously. I thought that people would be way too nervous about their health, their jobs, and the economy generally to want to make any big investments.
Much to everyone's surprise, after an initial *weird* few weeks, the real estate market came back like gangbusters. Who knew that everyone's reaction to a pandemic would be to move? Out of condos and into singles, out of the city and into the burbs or even further out to coastal and mountain communities, closer to family, or even back into parents' homes. Basically, everybody seemed to be moving in 2020 or 2021, and a lot of that was buying. As you can see in the National Association of Realtors graph below, existing home sales in 2021 and those forecast for 2022 exceed sales in all of the previous 13 years:
As you can imagine, all this buying demand in our low-inventory landscape has driven prices up -- A LOT. In Massachusetts, for example, the median price of single family homes this year is up 27% over 2019 prices and condo prices are up 20%.
So where are we RIGHT NOW?
Well, this fall, as last, has been a bit soft. At least for condos. But not all condos. Demand this season varies widely from property to property, and not always in any logical or predictable way -- even the most seasoned industry veterans I talk to will concede that they find it very hard to price their listings and advise their buyer clients on offer pricing right now.
All of this can be stressful for sellers and their agents, but the flip side is that there have been some great opportunities for buyers. I've actually had buyers' offers accepted with less than 20% down and inspection contingencies -- imagine!
So what does this all mean for the coming year?
(Reminder that this is all speculation...) Although some in the industry believe that the market may begin to level off and become more balanced, my expectation is that the spring real estate market will wind up just as hyper-competitive as it's been for the last several years. This is less based on reasons WHY it will happen than on lack of reasons for why it wouldn't be the case. Because really, not much has changed: we still have low inventory, there is still strong buyer demand, and mortgage rates, though likely to increase in 2022, are only predicted to hit somewhere between 3 and 3.5% by mid-year. This is still amazingly low -- and low rates have been on of the big drivers of the recent homebuying frenzy.
So, that's my best guess. But who really knows :)