2021 became a year that left buyers frustrated and sellers celebrating all the way to the bank, as the average sales price increased over $100,000 in just 12 months.
Coming out of 2020, the real estate market was surprisingly advantageous to sellers. The assumption by many that the emerging coronavirus would slow down home sales proved to be completely false. Most home builders had initially put the brakes on starting new homes and now struggled to keep up with the surging demand. A shortage of building materials further compounded the issue, leading to some homes taking 12 months or more to complete.
With many buyers not willing to wait a year for a new home, resale homes became the preferred alternative. This caused the supply of homes, measured by active listings on the MLS, to drop to the lowest number in years and further plunged us into a seller’s market.
The new normal became a bidding war on every house, pushing prices higher and higher. In June, the average home sold for 4% more than the asking price. Additionally, buyers had to give up normal contingencies and concessions to even have a chance at their offer being selected. And the thought of asking the seller to pay for a home warranty plan or to pay your closing costs was insulting.
I had several of my own listings get over 20 offers the first weekend. Personally, I would never buy a home without having it professionally inspected, yet many contracts I received had buyers waving the right to a home inspection and guaranteeing to pay the difference if the appraisal came in low.
And many still got beat out by cash. Not a low-ball cash offer from an investor fishing for a good deal, but a strong cash offer that was higher than the asking price. Other Realtors with an FHA or VA buyer would send me emails begging for a chance to have their offer accepted, stating that they had already been outbid on 10, 15, sometimes 20 offers. In the end, buyers felt exhausted and disappointed with the offer process and wondering if they overpaid for the home. Or they just gave up and decided to rent, with the hope that a year later the prices and interest rates would still be affordable.
For sellers, however, the market was anything but disappointing. The formula to getting a house sold was simple: 1. Put home on the market on Friday, 2. Stay away all weekend while a constant stream of buyers come tour the home, 3. Review all your offers on Monday, 4. Pinch yourself to see if it was just a dream.
Toward the end of 2021, the strong seller’s market started to normalize. The number of active listings tripled, prices flattened, and the average home started selling for just below the asking price. Home builders began to have spec homes available to purchase. And buyers are now regaining hope they can find their dream home and make an offer without giving up their right to negotiate.
As we head into 2022, don’t expect the pendulum to keep swinging all the way to a buyer’s market. Maricopa typically sees a higher demand for home sales in spring and early summer, so prices will likely continue to rise — gradually. Just don’t bet on your home’s equity going up $100,000 again in 2022.
This story was first published in the January edition of InMaricopa magazine.