The Roman god Janus was a deity known to have two faces- one looking in the past and the other looking into the future. It’s from him that we derive the name of the first month of the year, January. Given all that has been written and discussed about real estate in the year that has just concluded, I’m not sure that the polycephalic divinity- whose responsibility it was to look backward- would have further interest in discussing the year that was. I’m sure that, like the rest of us, he’s realized that real estate in the past twelve months has been overanalyzed and over-discussed. As we all know, there were more buyers than there were sellers and, as a result, valuations soared. Other than that, what more needs to be said? (Well. Okay. If pressed, I could mention that the Mark Siwiec Team sold more than $82 million in residential real estate- an all-time high! However, I digress…) Rather than abiding by tradition and conveying my sentiments about this past year’s real estate trends, I thought that I would share a few personal thoughts before turning to Janus’ outward gaze and forecasting market trends for the coming 365 days.
Community
It seems that everyone agrees that the preceding twelve months have been emotionally difficult. Many described a lingering malaise or depression that they had never before experienced. Expectations that COVID would be receding into our collective memory have been dashed by the realities of the new viral mutation, Omicron. Meanwhile, America is being torn apart by political bickering. In the past, during periods of unrest, it was common to find comfort in the company of others. Unfortunately, the very elements that are the cause of our discontent are the same reasons that have made communal solace difficult, if not nearly impossible. In an attempt to maintain optimism and good mental health, it’s been necessary to create new outlets for social engagement and the creation of community. Likewise, holistic wellness is viewed as a necessary component of one’s fitness regimen. Personally, my team and I have turned to each other and, increasingly, to our clients to help create a greater sense of normalcy.
- The fact that four members of our team have given birth in the past four months has certainly brought a sense of levity and joy to our workplace. Gathering for showers, celebrating the babies’ arrivals, picking up the slack for those on maternity leave- these have been great opportunities to strengthen the bonds that already existed. However, it was a tough year and we’ve learned that in 2022, we need to do more to remain affirmative and healthy. Working remotely will certainly be a part of our continuing strategy as will hiring more staff to help contend with the surge in our business. We’re already encouraging team members to schedule long weekends and short vacations rather than wait to make plans when it is that we’re overwhelmed by the mandates of the spring market. Better lighting, ambient music, a lactation room that doubles as a meditation space- these are all initiatives to be discussed at our retreat in Aurora, New York in the beginning of January.
- One of the residual benefits of our increased marketing efforts is the stronger connection that has grown between our team and our clients. Good business practices, if conducted authentically and with sincerity, generate a myriad of benevolent outcomes. Friendship and community are two of the rewards that need to be both acknowledged and celebrated and both have grown stronger as a result of the client outreach that we’ve been conducting the past few years. In particular, safe, outdoor events like the Red Wings game and the annual pumpkin gala at Wickham Farms were great opportunities for us to nurture these important relationships. Although it wasn’t a gathering, our Thanksgiving pie drop, despite supply chain disruptions, was another big hit. Many thanks to Majuwa Kowai-Bell, our mortgage partner at Genesee Regional Bank, for co-hosting these events with us. Together, if conditions are safe, we’re planning on adding an enormous summer carnival as another means of conveying our gratitude to the thousands of men and women who have worked with us through the years. Stay tuned!
Forecast
Looking into the future, I’m seeing a lot of the same trends that defined 2021 impacting the local market over the next six months. As I’ve stated, ad infinitum, there were approximately 7,500 homes available for sale in the six-county region back in 2014. Today, there are 587. Sure, we’re at the nadir of the calendar year for listings. Nevertheless, I don’t see anything transpiring that will suddenly cause an insurgence of thousands of new homes on the market for sale. More likely than not, we’ll hover around 1,000 available units on most days. Realtor.com is predicting an 8.3% growth in the number of transactions in the Rochester region. While that’s movement in the right direction, eighty new sales is not the satisfying remedy that is, ultimately, needed.
As a result of the dearth of available homes, buyers will still find themselves at a disadvantage. The multitudes who were not successful in purchasing last year will inevitably re-enter the market joined by those who are just now beginning their search. As a result of the yawning gap between supply and demand, property values will increase yet again. However, nobody is predicting an increase anywhere near last year’s historic 19% surge. Depending on your chosen augur, you’re going to find a wide disparity in projected national growth. Zillow, whose embarrassing inability to accurately predict home valuation was recently made public, is suggesting an 11% rise in value. Fannie Mae is offering up 7.9%. Freddie Mac? 7%. Redfin is certain that property values will grow a paltry 3% while our friends at realtor.com are predicting an even more disappointing 2.9%. The only statistic that I was able to uncover that referenced local valuation was realtor.com which stated that home prices in the Rochester region would climb 4% – approximately that which we have historically come to expect.
Despite the lack of consensus on valuation, there are two economic forecasts about which everyone agrees- inflation and interest rates. Inflation, long on the horizon, has finally taken hold and hit a 39-year high back in November. There seems to be little conversation about when it is that this bellwether price index will begin showing signs of more modest increases or recovery. Stated another way, it looks as if we’ll have to contend with higher prices for the foreseeable future. Meanwhile, Majuwa (who can be reached at 472-9345) is telling us that interest rates, which are currently pegged at 3.01%, will probably climb half a percentage point and will hover in the mid to high threes by the middle of the year. In other words, it seems as if the first six months of 2022 are going to mirror the intensity of last year’s market although it seems unlikely that the same furor will continue, unabated, in the second half of the year. I would recommend that buyers and sellers consider entering the market in the earlier half of 2022. Buyers will enjoy more favorable financing terms while sellers will probably enjoy a greater number of buyers looking to purchase before interest rates and inflation diminish their enthusiasm. If you have questions or concerns about real estate, feel free to call me at 330-8750.
Finally, as I stated earlier, this is a difficult time for many people. Economic uncertainty, COVID and other health issues, the environment, political sniping- everything seems to be conspiring to derail our plans to remain happy. The current state of national and world affairs may seem hopeless, however, individually, we have the power to create a more peaceful world. Let’s pledge to be a bit more patient, empathetic, and generous toward those around us. Together, we can prosper. Best wishes for a peaceful and healthy 2022. Happy New Year!