2021’s final quarter is coming at a time when many in the real estate business are wondering if normal even means anything any more to the real estate cycle. That being said, there are signs that the sustained seller’s market that has continued for over a year could be softening, according to Homelight’s End of Year Top Agent Insights. 2022 could bring some return of the more typical real estate cycles if no new market shocks arrive in the coming months.
With these shifting winds of real estate change, there are still plenty of strong signs for sellers to hope for good returns, and potentially to receive more solid offers due to the less breakneck speed of offers in past months. Other housing and real estate trends point to features like outdoor lounges for entertaining and accessory dwelling units (ADUs) as house elements that have staying power despite also having their moment right now.
Market Downshift Drops Instances of Bidding Wars, Contingency Waivers
While no point source explains all of the shifts in real estate in the past few months, it appears that property values in hot neighborhoods could only climb so high. Eventually, buyers leave the market due to frustrations with low inventory or unattainable prices. This has resulted in a little loosening of the low inventory knot, with more sellers having homes staying on the market for a few more days. This, in turn, can be a benefit even if sellers would of course prefer to sell quickly.
With more days to consider, more of the offers being submitted are able to move forward; for instance, some offers are submitted in bidding wars at levels that cannot possibly be validated by the house’s appraisal. With more of these fast deals falling through in mid-2021, it seems that sellers and buyers alike have slowed down and come to the negotiating table, recognizing that waiving rights to inspections can be a foolish move in some cases and that getting the house isn’t always worth waiving all contingencies.
Ideally, this softened but still pro-seller market will help the cycles return to something more like normal seasonal shifts in supply and demand, all while seeing more offers become contracts become closed sales.
Continued Interest in ADUs for Multigenerational Living and Short-Term Rentals
Accessory dwelling units, ADUs, have been a value-add to homes pretty much forever, but they’ve gained some serious sway in the past year or two. An ADU can be an in-home separate living space, such as a finished basement, in-law suite, or attic apartment, or a guest house or tiny home on your property that shares no walls.
Regardless, the interest in these units has surged for at least two reasons. First was the appeal of having three or more generations of family living very close to each other so that they could minimize breaking social distancing concerns by joining their households and simply avoiding contact with those outside the live-in family. Having family members around eased the burden on parents who were pushed to work full-time jobs remotely while caring for children who didn’t have in-person school or out-of-home childcare options. At the same time, family members often value independence and separate space, so having a separate guest home or apartment could be the valuable space needed to keep domestic harmony.
Another way that ADUs have grown in popularity is as short-term rental properties on sites like Airbnb and VRBO, where such things are legal. With property values continuing to grow, many people afford home ownership by also having part of their property available as a rental, and the flexibility of sometimes listing the ADU and sometimes keeping it free for one’s own needs has boosted interest in having people rent a room in one’s house. This is much easier to facilitate when the ADU has its own separate entrance and convenience features like a kitchenette.
Surge in Interest in Golf-Adjacent Property
Real estate agents have seen a surge in golf club memberships and also in the value of golf-course properties lately. The first entrance into the sport for many people was the need for outdoor entertainment that kept social distancing practices intact, and golf tends to do this well. By adding new faces to the golf scene, country clubs and other golf communities found themselves inundated with interest for the whole lifestyle, including buying real estate there. Anyone who owns in a golf course community at this point is likely to be able to sell with strong buyer interest due to the surge in the sport.
Looking for that “It Factor” Outdoor Feature? It’s The High-Quality Outdoor Fireplace
While many backyard features, from in-ground pools to outdoor kitchens, saw a surge in popularity and in resale ROI during the pandemic, one of the features that falls into an ROI sweet spot is the outdoor fireplace. These high-end, resort-style fireplaces are a much more permanent, stone-accented addition to a yard that, while sturdy and beautiful, are usually less expensive to install than higher-end additions like an in-ground hot tub. While it is never guaranteed that a home addition will fully recoup costs in the sale down the road, real estate agents are reporting that these features are particularly engaging to buyers right now, so if you have one, make it a focal point in your sales strategy.
No matter what the future market holds, a top real estate agent is going to be focused on keeping up with the latest trends in your market so that they can give you the best possible advice. Check with them about things like how to market your ADU effectively or how to spruce up your outdoor lounge area to draw in the most buyer interest. With a high-quality agent on your side, you have the opportunity to really make a splash even in a market that isn’t experiencing meteoric rises in property values in every area.