By Holly Henbest, Realtor
Does the new year have you thinking about your real estate goals? Perhaps buying, selling, investing or all the above? If so, it might be good to be aware of some predictions for 2022 in the world of real estate. While 2021 may be remembered as a whirlwind of multiple offers, bidding wars, increased prices, record-breaking sales, and quick sales, you’re probably wondering if 2022 may bring a change.
When it comes to home prices, we are seeing economists and news outlets projecting home prices to grow between 3% – 14% (depending on geographic location). So, what about Arizona? Home price increases in Arizona for 2022 may range between 7% – 13%. While opinions vary on the amount of increase, there seems to be a consensus that prices will continue to go up, yet not as significantly as in 2021.
It is also predicted that our shortage of inventory will be the primary factor affecting the continuing increases in pricing. The supply shortage and demand increase are the crux of the issue. On the other hand, locally we will see some additional inventory hit our immediate area next year with the homes on the East side of Desert Ridge being built. Homes are under construction and already selling at Talinn at Desert Ridge, and builders include Shea, D.R. Horton, and Pulte.
Our supply and demand issue in Arizona will also continue to be impacted by increased population as Arizona is predicted to remain a geographic hot spot with relocation of out-of-state buyers continuing. Between our cost of living, weather, job availability and businesses moving here, we will continue to attract out-of-state buyers.
When it comes to getting multiple offers and bidding wars, we expect to continue to see that trend. However, we’ve already seen a decline in the volume of offers on properties since last spring. Last spring it wasn’t unusual to receive well over 20 offers on a home, and now we’re typically receiving five to 10. The lower the price, the more offers typically received and the higher the price, the fewer offers received, but it’s unusual to only get one offer.
In addition to prices continuing to rise, we also predict a rise in interest rates. While we expect rates to increase in 2022, the increases will likely be modest. We certainly can’t suggest buying now versus later because interest rates are rising, but the combination of increased interest rates and home sale prices do compute to a more expensive real estate cost in the months ahead.
A lot of people ask us when they should buy and when they should sell. There is always a desire to “time” the market to try to sell high and buy low. We always say that if you’re buying and selling in the same timeframe, then you’re buying and selling in the same market. Therefore, if you’re waiting for the price of your home to increase, the price of the home you’re going to buy is likely also increasing. We suggest that if you plan to be both buying and selling, the best time to likely do so is when it’s best for you, all things considered.
If you’re only buying and not selling, then sooner would be better than later because prices and interest rates will continue to increase. If you’re only selling and perhaps moving out of state, then at this point any time may be a good time.
While we wish we truly held a crystal ball and could predict the future, we can’t. We can only take in the information we see and hear about from various sources around us, combined with our hands-on experiences. At this point in time, my confidence in the market is strong. Arizona is a desired destination, supply is low, demand is high, and we are a long way away from builders catching up to our demand for homes. Builders stopped building during the recession and, although they started applying for permits to build, the real impact of building didn’t hit until 2019; that puts us about eight to nine years behind on building. There is still a lot of catching up to do with just creating enough homes and infrastructure to support our growing population.
It’s also important to note that news regarding real estate is always generic by city or state, but the data that is most important to you will be specific to your neighborhood. Even general news about Desert Ridge, Tatum Highlands or Tatum Ranch can be misleading because the difference in supply and demand can vary greatly between the individual neighborhoods in those communities. If you have a specific question about your home or neighborhood, please reach out to us at 480-266-8785 and we’d be happy to chat with you.
Holly has been a Desert Ridge resident since 2000 and has been a Realtor since 2006. She is the leader of The Henbest Team with Realty One Group. Holly is ranked in the top ½ of 1 percent of Realtors in Arizona and is a certified luxury marketing expert. She was also ranked #24 in 2019 by the Phoenix Business Journal and recognized by So Scottsdale! magazine as a Real Estate Superstar for 2019.