The fallout from such ongoing domestic and worldwide trends as climate change, rising inflation, coping with COVID, supply chain disruptions, labor shortages and a lack of affordable housing will continue to impact the nation’s real estate industry in 2022, according to two of the leading executives in that industry.
Tami Bonnell, co-chair of EXIT Realty Corp. International, and Ryan Gorman, President and CEO of Coldwell Banker Real Estate, shared their views on what we can expect to see in the real estate industry this year.
“There were more than 6 million real estate transactions in 2021,” said Bonnell, “That’s an extreme number even surpassing 2007. There’s a huge amount of pent-up demand and I see that continuing this year and probably into the following year.”
But even with current housing demand far exceeding supply, Bonnell sees some factors that will lead to an increase in inventory. Some recent homebuyers are “having buyers’ remorse.” “Over 60 percent of first-time buyers are finding that they spent too much money and don’t have the funds they need in reserve for repairs or other things they need to do,” she explains.
“I think there will be some great opportunities,” Bonnell continues, “for first-time homebuyers as some properties purchased during COVID with extreme emotion come back on the market.”
She notes that home prices will continue to go up but not at the same rate as in the recent past.
Both Bonnell and Gorman are somewhat optimistic about the interest being displayed by communities across the country in finding ways to increase the stock of affordable housing.
“Fair housing is being talked about nonstop,” said Bonnell. “It’s being brought up from every angle. It’s being brought up in communities. It’s being brought up at planning boards in municipalities. It’s being brought up absolutely everywhere.”
With all the unusual things going on in the world, and subsequently, in the real estate market, the desire for housing remains fundamental and has not changed greatly, according to Gorman.
“What has driven real estate demand,” Gorman says, “has been life changes — people getting married, having kids, getting divorced, family members moving in and kids moving out. What we have seen recently is a massive acceleration of all those changes.”
Gorman agrees with Bonnell that meeting these fundamental needs for housing are being taken more seriously by many communities than it has in the past.
“The U.S. government still wants people to own,” Gorman notes, “so they have programs that subsidize the secondary mortgage market. That continues to drive homeownership and the value of homes has probably never been higher.”
The quest for affordable housing, says Gorman, will continue and people will adjust such as eating out less often or buying fewer electronics to enable them to bridge the affordability gap.
Bonnell is encouraged by the role local, state, and the federal government are taking in closing that gap. She notes the many programs that are providing grants and down payment assistance. “The California Association of Realtors,” she said, “is providing grants that can help to make a difference. Maybe all we need to do is fine-tune some of these programs and spread them across the country.”
Whatever solutions are proposed to make housing more affordable; they will have to contend with a real estate market with much higher-than-normal demand.
“Even though you can build, you still have 10 people who want every new house,” Gorman observes. “That fundamental demand is going to remain strong in 2022, almost not matter what’s happening in the world.”