Pulse is a recurring column where we ask for readers’ takes on varying topics in a weekly survey and report back with our findings.
We know it’s early, but we’re already thinking about next year and how it’s going to shape the industry. After all, the past two years have so fundamentally changed both our personal and work lives, can anyone blame us for wondering what 2022 will bring?
We asked readers last week to share their top predictions for 2022. Here’s what they see in their crystal balls:
- Home prices will decline.
- I predict inventory will get even tighter. Only people with the strongest motivations will sell because of how hard it is to buy. Many people have low rates, which will further make it a difficult decision to move.
- I think those who do good business will continue to do good business, and “part-timers” are going to have a tough time gaining traction.
- Trend to “local” real estate. More inventory will be available, and more investment vacation rental properties will be put on the market. The need for Realtors will increase.
- Buyer agent and seller agent commissions will be uncoupled at the legislative level.
- Will slow down and return to 2018-2019 market condition, become a buyer’s market.
- Inventory will remain low, but start to pick up in the spring, following more traditional seasonal trends. As a result, prices will continue to appreciate, but at a lesser rate than we’ve experienced the past year.
- I expect the housing market to remain strong in 2022.
- Interest rates will rise close to, if not over 4 percent, by the end of the year; home prices will drop; and we will see the start of a global recession.
- Price appreciation will slow to 4-8 percent for 2022, and we’ll see a flat market the following year.
- The market will moderate and seasonality will return across most markets. Demand remains strong as rents continue to increase, and as such at today’s current mortgage rates, even with the price appreciation we have seen this past year, it’s still cheaper (and far more lucrative) to own versus rent. Home sales will continue to increase in the 5 percent range nationally, and prices will continue to rise, albeit at a more normalized levels (3-5 percent).
- The greatest challenge to the market will continue to be available inventory, which will plague the market throughout 2022 (and beyond). One has to wonder if two months of available supply is the new normal.
- All said … remember the market is hyperlocal, and certain markets will be tied to local economics. Job and wage growth locally will drive higher performing markets and vice-versa.
- I think that what’s happening right now is going to carry on in 2022, which is that the market is going to continue to be strong. I think that buyer confidence is going to continue to grow as COVID has sort of gotten under control, and people are getting more desensitized to it, so I think there’s more buyer confidence in New York City in that regard. So I think that’s going to carry on.
I also think that the foreign and national investors in New York are going to keep coming in as travel becomes easier (barring another surge in the virus), and that’s going to continue to fuel the market, especially the luxury market and the condo market.
What I’ve seen immediately after the borders were opened to many countries on Nov. 8 is that people who are savvy realize that foreigners are coming back, so it’s making domestic buyers move more quickly and make offers more quickly, thinking that they’ll have a limited amount of time to get a certain deal on something, they think that prices are going to go up. I’ve heard it as well, I’ve spoken to buyers I’m showing apartments to, who have said that they do think that foreign buyers are coming back, so I think that they are looking to get something done before a potential big surge in pricing happens.
I just sold an apartment at The Plaza, and both of the buyers who were pursuing it were conscious of foreign buyers coming back and wanted to make it happen quickly. We made a deal and went to contract with someone who’s not a foreign buyer, but who wanted to make a deal quickly.
Especially because The Plaza is a building that’s popular with foreign buyers, historically, there’s been a lot of foreign buyers. Because of its infamy and because it’s a condo, it’s in a central location and just because of the name of The Plaza, it draws a lot of foreign buyers. One of the [domestic] buyers was a real estate person, the other a finance person. They knew foreign buyers could end up costing them if they don’t move quickly.
- It seems like more New Yorkers have bought cars in the last year as a result of COVID and a way to spend time outside of the city. As a result, I am beginning to hear from buyers about the need for a parking garage or street parking in close proximity to a property. I think we are going to hear more about this in the coming months.
I was talking to a buyer the other day about how active Sutton Place is right now. I think the neighborhood is having a revival of some sort and this will likely continue into 2022. Sutton Place has always been active, but it’s really having a moment with sales activity and amongst a diverse group of people, like young professionals, families and retirees. My buyer has viewed properties across the Upper East Side, but at the end of the day, she can get more space (and an amazing view of the east river or a quiet block of townhomes) for her money in Sutton Place.
- My prediction is that this market and the 2022 spring market is not for the timid. Motivated buyers who are experienced trading in an active market, who are cash flush or pre-approved for mortgages, will do well to purchase right now, before supply chain issues, potential inflation and rising interest rates take control of the market.
I have recently had a first-time buyer slow down their search until spring and one suspended their search altogether while they focus on other aspects of their lives. I am working to encourage them to remain searching actively, but not sure they will listen. Another client who has been told by her landlord that he will not renew her lease in June, faces an even bigger challenge as rental prices rise and inventory tightens. The luxury market will remain strong in 2022.
- I think we will be back to a pre-pandemic normal after the holidays. With the majority of people who left Manhattan already back and inventory low, we will have a very busy spring that could possibly carry all the way through the summer.
- I am very optimistic about the future of New York City real estate, even in properties where renovation is required. Many brokers take the position that buyers do not want to take on renovation work. They want things ready to go. Well that is true, up to a point, but if an apartment has a lot going for it, like say a great location, beautiful views, large rooms or better yet, all of the above buyers will not mind doing the work as long as the seller factors the cost of doing that work and reduces the price proportionally. What we did was get three estimates for doing a first class renovation. We took the highest estimate and added on another 10 percent for anticipated supply chain problems and labor backups due to COVID and reduced the asking price by that amount.
What’s your take? Feel free to share your top predictions in the comments section below.