By Bob Walsmith Jr.
Santa Barbara Association of Realtors
The biggest question on people’s minds these days regarding our local real estate market is, “What is going to happen to the market in 2022?” That’s really an easy question to answer: I have no idea! You might as well consult a Magic 8-Ball or a fortune cookie. I say that because we are way overdue for a “correction” to prices, both locally and across the country.
Historically, prices tend to go up over a 4-6 year cycle and then go down and correct themselves. However, we are in a period of historical growth and it has been almost ten years now since home prices started rising. And during the pandemic we have seen prices go up at rates not seen by anyone that I have talked to. Couple that with very little inventory available and historically low interest rates, and homes are selling for prices farther above the listing prices than Realtors have ever seen.
There does, however, seem to be a light at the end of the tunnel. Hopefully it is not an oncoming train. I am a big believer in reading housing reports from experts a lot smarter than I am, such as chief economists from the California Association of Realtors and the National Association of Realtors. The most recent studies from these two organizations seem to indicate that although prices will continue to rise during this year, the rate will be significantly lower than we have seen over the past eighteen months or so.
With interest rates expected to rise, this combination means that more homes should be coming on the market, hopefully by spring, allowing more people to realize the dream of home ownership. Many people, however, are waiting to buy until prices drop. They are using the housing bubble of 2007-2009 as evidence that they should wait.
Our economy is markedly different than it was back then. And most economists feel that even if home prices do drop, they will only fall 5-10%, not the 30-40% they did during the end of the 2000’s. That is often a hard pill for people to swallow; it’s difficult for some to wrap their brain around this concept.
One housing expert said, “that people should ‘bite the bullet and overpay now,’ especially if they are going to live in their homes for at least the state average of eight years.” Another recent study showed that the average equity rise in California was almost 28% from June 2020 to June 2021. That is substantial!
One of my esteemed colleagues said recently that we will be entering a “red hot market” instead of the current “white hot market.” One thing is for certain: given the state of the world during the last two years, anything is possible.
Bob Walsmith Jr. is a native to Southern California and a Realtor® with Berkshire Hathaway HomeServices California Properties in Santa Barbara. During his work with the Santa Barbara Association of Realtors, Bob has served on the CORE Committee, Education Committee, been Chair of the Budget & Finance Committee, and the Multiple Listing Service Committee. He also is on the Board of Directors of the Alpha Resource Center of Santa Barbara. Bob lives in Goleta with his beautiful wife Julie. When not working, Bob enjoys playing golf, fine wine, fine dining, and walking our beautiful coastline. Bob can be reached at 805.720.5362 and/or firstname.lastname@example.org