Real Estate Trends: What’s Ahead for the Rest of 2022?

Let’s start with the good news!

The U.S. real estate market has weathered the effects of the pandemic and is expected to be less extreme in 2022 than in 2021. Mortgage rates remain at historical lows, helping to increase the population ready to purchase property, including existing homeowners who decided to move for better options or renters believing it was the right time to jump into the market. Low or stopped homebuilding activity adds to housing inventory at unprecedented lows. This low supply compounds the high demand of 2021, which raised housing prices on average by at least 15%.

Some cities experienced even more significant price increases:

• Phoenix – home prices rose 28% as available homes on the market decreased by 18.6%
• Dallas – home sale prices jumped 20.3% with 27.6% fewer homes on the market
• Orlando – prices soared 22.8% as the available homes for sale was reduced by 29%

What could happen in 2022?

Our expectations for the housing market in 2022 include a slowing trend of homeowners moving locally. While not completely finished, residents needing a home suited to their needs (such as having a spare room for working from home) have for the most part already moved. While builders offer new construction, wait lists and delays for parts and materials will continue to affect delivery. Mortgage rates will rise and home prices may continue to escalate, making home buying less affordable for some people.

What does this mean for global mobility?

Companies that offer home sale benefits will probably see more amended sales and a reduced risk of homes falling into inventory. We are also seeing companies permitting the initial list price to be above the previously recommended maximum of 105% of the average of the two Broker’s Market Analysis (BMA), which allows homeowners to obtain the best price possible as markets continue to experience price increases.

On the flip side, home purchasers may still compete against multiple offers, especially customers with cash, while new construction delays are prevalent. Do not permit your transferees to bypass inspections; this can cause only heartache.

A silver lining is that this housing market is very different from 2008 and experts do not believe Loss-on-Sale provisions need to be added to mobility policies at this time.

How can global mobility help?

• Set expectations that in certain areas demand exceeds supply, and while this may not be because of the pandemic, and due to significant appreciation on homes, the seller is in control.
• Understanding local markets can be affected by the employer base, regional job growth and neighborhood desirability, so even in one metro area, there could be different types of housing markets.
• Consider providing an additional home finding trip or extending the length of the trip if low inventory is an issue.
• Allow for more time in temporary accommodations if securing a new home is taking longer than the typical 30 to 60 days.
• Require transferring employees to obtain a full credit approval concurrent with a loan pre-approval letter.
• Insist transferring employees work with relocation-trained agents who understand the protocols of these types of transactions and can advise when the buyer may be overpaying based on market analysis of every home under consideration.
• Set up regular conversations with employees who have transferred recently to fully understand the challenges they faced, and how policy could change to address issues.