2022 was a real doozy in the real estate world
Late winter and early spring say a high-flying real estate market where homebuyers had to place offers on multiple homes before winning a bid to buy a home. Investors with deep pockets of cash bought most of the homes as they were listed on the market. Housing prices soared and some sellers cashed out at the top of the market with fat paychecks for their home sale.
Sadly an unwanted visitor put the brakes on all the good times. Inflation stuck it’s ugly head in the door and in what seemed like an overnight shift – the housing market in Atlanta shut down for a minute. Why did that happen?
The real estate market standstill was because of the “Federal Reserve’s hiking of interest rates, rendering borrowing costs too pricy for most would-be homebuyers, who, no matter how hard they tried, couldn’t bend the numbers to their will. As rates rose, existing-home sales fell, builders pumped the brakes, price growth decelerated, and property sat on the sidelines far longer than forecasted. Real estate companies, meanwhile, braced for lean times after riding high through most of 2020 and 2021, with thousands of workers laid off and quarterly earnings reports showing losses — in some cases, to an unprecedented degree. “ Inman News
The National Association of Realtors reported sales of existing homes dropped 35.4 percent between November 2021 and November 2022, when the most recent data was available
Correspondingly mortgage rates jumped from below 3% in November 2021 to over 7% in 2022.
Opendoor, a company created to purchase homes directly from home owners and then turn around and flip them for a profit – Lost almost a billion dollars in the third quarter of 2022. The iBuyer promptly fired its CEO who had vowed to disrupt the real estate market.
Shell shocked Offerpad – another iBuyer – racked up close to one hundred million in losses in 2022
Zillow – a real estate portal company that also decided to become an iBuyer of homes – racked up staggering losses in 2022 and ditched its new iBuyer business plan. Millions of dollars were lost as Zillow management realized that buying and flipping homes is a risky endeavor.
Larger national real estate brokerage Compass lost $101 MILLION dollars in the 2nd quarter of 2022 and immediately starting slashing company spending. Management vowed to reduce their overhead by $320 million.
Redfin – another National real estate brokerage – fired a lot of workers in the second half of 2022 in a similar bid to reduce overhead costs and trim losses for 2022.
Keller Williams former CEO filed a lawsuit against the founder Gary Keller for $300 Million doillars – what was that all about?
Surprisingly, home values have remained fairly stable. It will be interesting to see what happens to home values in 2023.
Stay tuned for our 2023 Atlanta Real Estate Market predictions.