Biggest questions in real estate winter 2022

The Biggest Questions Clients Are Asking This Holiday Season

‘Tis the season for friendly gatherings, and you know what that means. Everyone is going to be asking you about the housing market.

The fact of the matter is, there’s a lot of speculation about what’s happening right now, and everyone’s got an opinion on it.

It’s your job to be prepared for that inevitable table talk so you can show (and tell) your friends and family what’s really going on in real estate right now. That way when you’re at a New Year’s party and someone asks a question, you don’t drop the ball during the ball drop.

So, sit back, sip some hot chocolate, and get the answers to the top questions you’ll need to answer this holiday season.

Where Are Home Prices Headed?

While there’s been a lot of concern prices would come crashing down this year, data shows that didn’t actually happen. In fact, home prices are rising in most of the nation. Experts say that trend will continue, just at a slower pace that’s much more normal for the market – and that’s a good thing.

To help show just how confident experts are in this continued appreciation, here’s the Home Price Expectation Survey from Pulsenomics – and it’s the perfect visual to have on your phone so you can share it with your friends, neighbors, and anyone you’re celebrating with this season.

This is a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. As the graph below shows, the consensus is, prices will keep climbing next year and in the years to come.

But that’s not the only question on everyone’s minds. Next up: mortgage rates.

But that’s not the only question on everyone’s minds. Next up: mortgage rates.

What’s Next for Mortgage Rates?

More than anything else lately, the housing market has been defined by rapidly rising mortgage rates. And they haven’t just risen. They’ve more than doubled since they days of under 3% we remember not long ago.

And, for your clients who are looking to buy a home, that definitely impacts how much they can afford. That’s why so many buyers want to know what’s going to happen with mortgage rates. The answer to that question is: no one can say for certain, but here’s what we know based on recent data and historical trends.

There’s a long-standing relationship between mortgage rates and inflation. Basically, when inflation is high, mortgage rates tend to follow suit. Over the past year, inflation was up, so mortgage rates were as well. But inflation is easing now. And this is why the Federal Reserve has recently paused their federal funds rate hikes, which means many experts believe mortgage rates will begin to come down.

And in some ways, we’ve started to see hints of slightly lower mortgage rates in recent weeks. But it’s certainly been volatile, and will likely continue to be that way going into next year. Some ongoing variation is to be expected, but the anticipation is, in 2024, we’ll see a downward trend.

As Aziz Sunderji, Strategist at Home Economics, says:

“The bottom line is that interest rates are likely to be lower-perhaps even lower than many optimists think – in the weeks and months to come.”

So, when people ask you what’ll happen going forward, the answer is to just keep an eye on inflation.

Then there’s the other piece of this – the dreaded “r” word: recession. 

Is a Recession Around the Corner?

While recession talk has been a common thing over the past few years, there’s good news on that front.

The Wall Street Journal (WSJ) polls experts on this topic regularly. And last year at this time, most of them thought a recession would have happened by now. But as experts look at all the leading indicators today, they’re changing their minds and saying a recession is getting less and less likely. The latest results show that more experts now think we’re not headed for another recession (see chart below):

This is big news for the housing market. And while the 48% to 52% split may seem close to half and half, the key thing to focus on is the majority of these experts think we’ve avoided a recession already.

Should I Buy a Home This Year?

Ultimately, all of these questions lead to this one: should I buy a home this year?

To answer it best, we must remember our number one job as real estate agents. We’re not here to convince people they should buy or sell a home. We’re here to present all the facts, insights, and data so they can make confident and informed decisions.

To put it simply, it’s our job to be housing market experts. That’s your most powerful and effective tool in a challenging market. Why? Because what you’re up against is scarier than anything else: misinformation.

“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt. These decisions can be hugely consequential for consumers and businesses,” said Jason Lewis, Co-founder & Chief Data Officer at Parcl.

So, is it a good time to buy a home right now? The answer may be different for each client you work with.

For first-time homebuyers, the biggest factor to consider is rising rental costs throughout the country. The slide below truly tells the whole story. The reality is, homeownership presents the opportunity for a stable monthly payment as well as the ability to build wealth and make a long-term financial investment. It offers security and a sense of accomplishment that renting can’t.

The next piece of this is that life happens. Personal situations change, jobs require relocation, aging parents may have to move, etc. These can all play a big part in someone’s need to buy or sell a home right now.

The best way you can answer this question is to:

  1. Figure out their motivation so you can understand their true needs.
  2. Put on your expert hat, take all the national and local market data you have, and present it to them so they can decide what’s best for their unique situation.

At the end of the day, while the market may be a different place than it was over the last few years, there are many financial and non-financial benefits of homeownership that stand the test of time.

“If you can find a house that meets your financial expectations for a monthly payment and it is a good time for you to buy, then do that…And if you wait for prices to fall and they never do, you may discover the hard way that the house you found a year ago that you really loved, that you could afford but you passed on, is more expensive next year,” said Odeta Kushi, deputy chief economist of First American.

So, painting the full picture and backing it up with visuals so you’re not just telling, but showing them what you’re talking about, is the best way to answer this question.

And, with that in mind, bringing in these national insights along with data on what’s happening in your local market will help you, your kin, and your clients understand the bigger picture of what’s ahead for housing.

Bottom Line

As friends and family gather this holiday season, there’s bound to be some shop talk about the housing market. 

In order to remain the real estate expert in your circle, you need to be able to provide confident, relevant, and educated responses that are backed by facts.

You know how this industry works. Every little interaction, no matter how big or small, can make an impact. What may seem like small talk at a holiday party could mean big business in the new year.

Get the exact words you need to reclaim the narrative and build confidence in your clients, instead of fear with our Confident Conversations Scripts Toolkit.

You’ll get specific talking points. Plus, the real data we used and additional content you can share to back up everything you say.

While you can’t fully forecast the future, you can do your best to provide a relevant market opinion based upon facts – and this is a great example of exactly how to do that. Download it today.