PHOENIX (3TV/CBS 5) - As a red-hot year in real estate is coming to a close, real estate experts are predicting prices will continue to increase in 2022.
"I think the record-breaking pace that we're on is going to continue," said Phoenix real estate agent Trevor Halpern. "Quite frankly, there's an imbalance of the number of homes we have available with the number of people moving to town, so we should continue to see prices go up."
Erik Bildman, the vice president of real estate startup Sundae, also believes prices will go up in the Phoenix area. Sundae operates in multiple markets and caters to investors who want to purchase distressed properties and sellers who are seeking non-contingent cash sales.
"Prices will likely continue to go up, just given the fact that there's such limited supply out there, but it can't continue to appreciate at that same pace," Bildman said. "We're predicting somewhere in the high single digits to low teens for next year."
TREND: Mortgage interest rates will increase
The National Bankers Association is projecting the 30-year-fixed-rate mortgage to hit 4%. "We haven't seen that level in a number of years," Halpern said. "Even though historically, that's still a low rate, it's a shock to people who are used to 2.5%, 2.75%, 3%, 3.25%."
"If interest rates start to tick up, that is when I think we could see prices really start cooling off a little bit," Bildman added.
TREND: Fewer iBuyer sales
In 2022, we might see less action from instant buyers, more commonly referred to as iBuyers. According to Zillow Research, homeowners in the Phoenix area sold almost $1.5 billion worth of homes to iBuyers last quarter, representing about 12% of all homes sold in the area. But one of the major players, Zillow Offers, is getting out of the iBuyer business, telling investors it is too risky.
"I think what it sends is a signal to the marketplace, and to the iBuyers in general, that that model may not be working," Halpern said. As of early December, Zillow said it had offloaded about 50% of the homes it bought.
"If they just dump all of those properties on the market, it would have an impact," Bildman said. "It would increase the current week supply from around six weeks to nine weeks, but it's doubtful that they're going to do that. They're still probably going to try to maximize what they can on their remaining inventory."
TREND: City vs. suburbs?
"When it comes to whether to buy in Phoenix or whether to buy in the outlying areas or what's going to trend higher, I think they will all rise pretty darn equally," Halpern said. "There are some people that went to the suburbs, made bunch of money on their homes, and now can turn that equity into a home in the central part of town."
On the flip side, many workers have changed their commuting habits because of the COVID-19 pandemic. Some may not need to report to an office at all, and are seeking extra square footage, which is often found in the suburbs.
"People want to make sure that their kids have space, and they want to make sure that they have work space," Halpern said. "We see people want a designated living room, and a designated dining room."