Market Outlook – First Quarter 2022
As the Federal Reserve confirmed they will be tapering in 2022 and raising rates from the low 3’s where they are at the time of writing this article, buyers who have been casually looking are suddenly more incentivized to strongly consider a purchase despite high prices if they have confidence in the longevity of their market. Some of these buyers already own a home that has appreciated tremendously over the past couple of years. See our blog about move-up buyers here. Our market here on the Monterey Peninsula has seen roughly 20% appreciation in 2021, and we are up about 30% from the peak of the last market cycle. It’s incredible what has happened since COVID 19 created a surge in June of 2020 with soaring stock portfolios and real estate appreciation leading to buyers in our feeder markets such as the Silicon Valley more ready than ever to own a home on the Monterey Peninsula. There was speculation that ‘work from home’ would end and tech buyers would have to go back to the office, but in recent months it seems there has become a compromise within many companies where employees don’t necessarily have to go back to the office full time. It’s a transitioning period for work culture to figure out how we can be most productive and most fulfilled. Interesting articles have surfaced with interviews of employees who feel they get more accomplished at home where they can work uninterrupted. With this kind of work flexibility, and a serious shortage of real estate inventory, demand on the Monterey Peninsula is higher than ever and so are the prices. First quarter of 2022, in my opinion, will not create a dip in housing prices. I believe prices will continue to climb or at least maintain current levels. I would think more sellers considering a move will decide to sell since the Fed is scheduled to increase in the Spring. We do see many cash buyers in our market, but a lot of very well qualified buyers are taking advantage of low rates to finance homes at a range of prices from sub 1M to luxury multi-million dollar homes. I believe the first quarter of 2022 will bring more inventory as sellers consider that borrowing money will become more expensive for buyers in a few months, and it really is the best time in history to list. This could create a more balanced market as qualified buyers have more opportunities to find homes that meet their criteria.