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John L. Scott CEO J. Lennox Scott shares the essentials for client consultations in 2022

by Patrick Regan

The COVID stimulus-fueled real estate market frenzy is over, and now things are downshifting to what’s historically considered a strong market. In many cases, that means managing client expectations to meet the realities of today’s market. 

At least, that’s the view of John L. Scott Real Estate Chairman and CEO J. Lennox Scott. In a recent interview with Seattle Agent, he shared his thoughts on the essentials for client consultations and conversations in 2022.

Scott said it will be important to frame the current housing market in the right way, using the right comparables, to help manage client expectations.

He predicted there will be headlines in the coming months about fewer transactions compared to the same months last year, suggesting an industry retreat, but that’s misleading. The market the last two years, driven in part by the COVID-19 economic stimulus, is an outlier, Scott said. 

“We’re going through an intensity adjustment,” Scott said. “The COVID economic stimulus is over as it relates to housing. Now that is no longer in play, we’re going from an uber-frenzy, multiple-offer environment … and coming back, over the months ahead, toward a strong market. We’re heading more toward a pre-pandemic market.”

In 2022, the Seattle area has seen a 17% appreciation in prices while interest rates have increased approximately 1.5%. Scott compared those numbers to the real estate market in 2018, when prices increased about 15% even as rates were on the upswing. The numbers were similar in 2019, and both 2018 and 2019 were considered strong years for residential real estate. 

One of the common client expectations that brokers are managing right now is sellers seeking home prices to match 2021 and early 2022. Some sellers may be expecting a dozen offers, all of them well above list price, but the market is already shifting away from that level of frenzy, Scott said. 

“You can’t compare a strong market to a COVID stimulus market,” he said. “We’re comparing to 2019, and it’s falling right in alignment.” 

There’s still an overall shortage of housing inventory, but things are in flux. This is the time of year when more listings hit the market, giving buyers more options, Scott said. 

A key part of the conversation with clients is presenting the latest market data, so they see what the broker sees. As for rising interest rates, Scott described them as “neutral.” They may not be driving real estate activity like they were in 2021, but they’re not necessarily so high that they’re discouraging it either. 

“That’s part of the consultation that we’re now having with sellers,” Scott said. “We’re really back to the market fundamentals of what drives the real estate market. That’s the seller and buyer motivation and a strong local economy. 

“Buyers will have a greater selection by summer. This is the first time in virtually two years where there’s a greater selection for buyers. Instead of being one of 15 offers, you may be one of several or you may be the offer, at market price.” 

 

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