Three Ways Homebuyers Will Get Control Back in 2022

There is no doubt that the pandemic created one of the strongest sellers’ market that continues to dominate the industry today, but there are already signs that a shift will soon begin to favor the buyer. We predict three reasons why this shift may happen: 

  • Increase in all-cash offers through alternative lending platforms;  
  • Renewed focus on equity during the homebuying process; and,  
  • Tech-enabled closing experiences saving time and money.  

1. Cash is King 

Last year saw record home prices and the homebuyer was struggling to compete. According to Redfin, more than 50 percent of homes were sold above listing price – an increase of almost 30 percent from 2020. Because of this increase, all-cash offers became the way for homebuyers to get ahead, but how does the average consumer win? That’s where iLenders come in. 

An iLender, also known as a power buyer, gives the competitive edge to the homebuyer by approving a loan amount, and in turn, allowing the homebuyer to make the equivalent of an all-cash offer. The iLender then purchases the property and eventually the ownership is later transferred to the homebuyer when the mortgage is finalized. As the all-cash offer is always the best option for the seller, this alternative all-cash offer for average homebuyers gives them a new advantage to help secure their dream home while the hot housing market continues.  

2. A Renewed Focus on Housing Equity (With the Help of Technology) 

Underrepresented communities have experienced even more challenges when purchasing a new home in this high-demand, low inventory market. For example, mortgage denial rates between black and white applicants grew by 10 percentage points in 2021, but there is hope for 2022.  

Government Sponsored Enterprises (GSEs) like Freddie Mac and Fannie Mae recognize their role in closing the home ownership gap and are looking for alternative ways to combat racial bias in the homebuyer journey through new tew technology. For example, Fannie Mae is looking to partner with technology companies to use available rent data to fast-track loans for homebuyers with little to low credit, the typical standard approval for a loan.  

Additionally, there is movement towards using technology to help offset the potential bias by an in-person appraisal by analyzing available data on the value of the home without revealing any personal information about the homeowner (e.g., number of rooms, renovations, etc.). 

3. Digitizing the Homebuyer Journey 

Beyond addressing bias in the industry, the pandemic also accelerated adoption of technology during the home closing process. Digital closings have increased 228% since 2019 and the use of remote online notarizations (RON) increased 547 percent in 2020 compared to 2019, according to an ALTA survey.  

The complete digitization of the home closing experience is going to be a lasting effect for 2022 and for years to come. Why? Because the largest share of homebuyers in the market right now are millennials. The millennial generation expect every experience to be instant and digital, and that includes buying a home. From searching online, to securing insurance to signing the closing documents, millennials want (and need) a seamless, fast and friction-free homebuyer experience. 

Year of the Homebuyer: 2022 

Tech-enabled solutions will create a jumpstart for the homebuyer in 2022 and allow for the average consumer to find a competitive edge in buying their dream home, and this is only the beginning.