6 Things Sellers Need to Know That Weren't True Last Year

It's worth saying outright: Things are changing, and there are things home sellers need to be aware of today that weren't true last year. Here's what they are:

1. Home price growth is returning to pre-pandemic levels

This is not the same as saying home prices are declining; they're not. Prices are still growing. It's the rate at which they're increasing that's changing. All the signs point to a return to pre-pandemic levels of growth. So, instead of the unprecedented near-20% year increases, we will likely see a more modest 7%-8% year-over-year growth. The number of home sales expected to occur in 2022 is 5.46 million, that's 10.8% down from 2021. 

2. Relocation hotspots have the highest home prices

The way local home prices behave is always different from national averages. An area that's extremely popular with homebuyers will have different housing market conditions from one that homebuyers are keen to leave. 

If you are in a popular neighborhood, you can command a higher home price even if the overall trend is for slower growth. Redfin calls these "migration hotspots" and reports that they have the highest inflation rates. In fact, Cape Coral and Naples were listed in Redfin's top five second-home markets in the nation. 

If you're not in a hotspot, you can still sell at a reasonable price if you know who your potential buyers are. An excellent real estate agent with local knowledge of your area can help you set this price and find these buyers.

3. More affordable areas are in demand

The overall trend among homebuyers right now is downsizing and saving on housing as much as possible. Moving patterns indicate a strong preference for more affordable areas. People are moving from the biggest and most expensive cities to smaller urban and suburban areas. These smaller communities offer good amenities but don't cost as much as the traditional vast metropolitan areas.

4. There is still homebuyer demand

As a home seller, you will see headlines like "homebuyer competition drops to the lowest levels in two years" and start to doubt whether now is a good time to list. But what the headlines fail to mention is that homebuyer competition pre-pandemic was already very high, so dropping to the "lowest level" still equates to high buyer demand.  In fact, there are a record number of millennial homebuyers entering the housing market in search of their first home. Boomers are still downsizing, and Generation X is preparing for retirement. This is a generational trend, and it won't go away any time soon. 

5. You may not get your first buyer

One of the most prominent features of the pandemic-era housing market conditions was that many homebuyers were willing to waive contingencies to secure a home. There is evidence that this is no longer the case. As Redfin deputy chief economist Taylor Marr says: "buyers are increasingly keeping rather than waiving inspection and appraisal contingencies. That gives them the flexibility to call the deal off if issues arise during the home buying process".

Some buyers may call off a deal after finding too many red flags in the inspection report. Others may be forced to backtrack after a mortgage application falls through. While inconvenient, this is a common occurrence and something you must prepare for by giving yourself more time to sell this year than last year.

6. An experienced real estate agent is more important than ever

Housing market conditions are a little trickier for home sellers this year than last year. It is even more critical this year than last year to get a real estate agent with solid experience and expertise in selling your type of home in your area. This will maximize your return on the sale and minimize the potential for delays and a deal falling through.