Here are the 11 "Lost" Buyer Profiles Of 2022
2022 has seen the withdrawal of the following home buyer profiles from the real estate markets:
1. Those priced out because interest rates - as well as home prices - have risen too high for them to be able to afford what they need/want.
2. Those fearful of a recession and the possibility of losing their job.
3. Those in a home with a super-low mortgage interest rate.
4. Those waiting for their bonus - yes, some entities have done very well in 2022 - to have the cash to buy in 2023 and reduce the size of their mortgage.
5. Those who are cautious and wish to 'wait and see' if /how much home prices come down before stepping in.
6. Those who cannot borrow against their stocks because the markets are sharply down over the past 12 months.
7. Those who have lost a fortune via crypto or other investments and need to hold on to cash reserves, or don't qualify anymore for loans.
8. Those holding onto their cash to deploy into equities - or have done so already - as many believe we are at or very close to the bottom.
9. Those who do not wish to take a large capital gain in 2022.
10. Those who still cannot find what they want due to limited supply.
11. Flippers hardly ever buy when markets indicate a downward trend.
This is a big chunk of buyers removed from the markets. BUT.....there is some good news. The vast majority of these 'lost' buyers will be back. They are simply out of the markets temporarily during the "GREAT REBALANCING OF 2022". Most home buyers whose plans are on hold return to their mission sooner or later. Be ready for that moment!
The changes in market dynamics that began in late spring/early summer 2022 generally continued in autumn due to the ongoing economic headwinds, including high inflation and interest rates, reduced consumer confidence, and volatile stock markets, though all have fluctuated significantly over the period, and some readings have recently improved. The great majority of indicators – home prices and appreciation rates, sales volumes, overbidding, days-on-market, months supply of inventory, and so on – continue to describe a market that has substantially cooled and “corrected” since spring 2022, when it appears that a long, dramatic, 10-year market upcycle peaked. (Note that a “correction” is not remotely similar to a crash, such as was seen during the subprime loan/foreclosure crisis.) But thousands of Bay Area homes continue to sell, some very quickly at over asking price: With the shifts in market conditions, pricing correctly has become an imperative for sellers.
December typically sees the low point of new-listing and sales activity – with an increasing number of homes taken off the market to await the new year – but listing, buying and selling continues. This can be an excellent time for buyers to aggressively negotiate prices, though the supply of listings to choose from declines. The market usually begins to wake up in mid-January and then quickly accelerates in early spring: In the Bay Area, depending on the weather and economic conditions, the “early spring” market can begin as soon as February.
The single, most closely watched factor will be interest rates, since they have such an outsized impact on monthly housing costs and affordability, as well as on stock markets and consumer confidence. At the end of this report is a link to our extended review of macroeconomic issues.