5 Boston Real Estate Trends You Can Expect in 2022
From tight inventory to bidding wars, home buyers in the City of Firsts have seen it all over the past two years when it comes to real estate.
2021 was a transitional year, where shifting buyer priorities upended norms in the Boston real estate market. Home prices hit record highs as scores of first-time and experienced buyers battled over a dwindling supply of available listings.
But buyers can attack their search with confidence in the new year, as there are several positive trends affecting home buying coming down the pipeline.
To help locals turn the trends in their favor, the team at Prevu Real Estate brainstormed what trends will drive the Boston real estate market in 2022.
Mortgage rates are expected to climb
Low-interest rates on mortgage loans are a double-edged sword and have contributed to the competitive market in recent years.
The lowered cost of borrowing witnessed in 2020 and 2021 allowed Bostonians to take their first steps on the property ownership ladder. It also enabled existing homeowners to sell their homes at higher prices. But the lower cost of borrowing created a lopsided market, where buyers were flush with cheap financing.
As economic activity and employment levels have improved following the influx of Covid disruptions in years past, the monetary stimulus provided by the Federal Reserve is widely expected to be scaled back as the policy makers’ attention shifts to rising inflation. The Federal Reserve has already begun tapering its mortgage back securities purchase program and is anticipated to begin raising rates by mid 2022.
These changes in monetary policy will trigger banks to increase mortgage rates in step.
Sale price growth expected to slow
Rising interest rates will also change the home buying landscape in 2022. Higher rates mean higher monthly mortgage payments, but they are also likely to usher in a return to a more balanced supply-demand dynamic and slower pace of home price increases.
Competition will subside when some buyers get pushed out of the market as they lose purchasing power with higher mortgage rates. Less competition will reduce the number of bidding wars and draw in new seller inventory from homeowners that were holding off selling out of fear of having to fight for the purchase of their next home.
Overall, the prospect of less competition and improving inventory is good news for fatigued homebuyers, as it will likely curb the rapid price increases they have been chasing.
Buyer rebates take center stage in 2022
As prices previously shot up in the Boston area, homebuyers looked for ways to remain competitive without depleting all of their hard-earned savings.
Savvy buyers discovered a means to make their home purchase more affordable despite the rising home prices. By partnering with a real estate broker that provides a commission rebate, buyers could feel more comfortable placing higher offers knowing they were lined up to receive money back after closing.
Traditional buyer’s agents pocket half of the broker fee when a sale closes. But the modern agents at Prevu Real Estate provide new homeowners with significant savings in the form of a cash back commission rebate.
These rebates give Bostonians an advantage versus other buyers and can total up to 2% of a home’s purchase price.
Normal seasonal buying patterns are likely to return
Over the past few years, homebuyer journeys have felt more like a marathon of bidding wars rather than the historic pattern of seasonal sprints.
With greater normalcy expected to return to residential real estate markets in 2022, many experts believe that seasonality will return as well. Buyers are likely to witness improving inventory with the onset of a more classic spring buying season.
Desire for shorter commutes again
As the pandemic made homeowners reconsider the cramped space in their North End condo, folks retreated to the suburbs and beyond. Some buyers looked to communities like Salem or Cohasset, while others gladly purchased properties in Framingham or Sharon.
But as the world continues its path to normalcy and offices fill back up again, scores of buyers aim to strike compromises between proximity to the city and property space. For some, that will mean a renewed search for more spacious condos in Downtown Boston. While for others, that will mean targeting suburbs with short commutes.This post was produced and paid for by Prevu