2021 is an Outlier, Not a Benchmark

2021 is an Outlier, Not a Benchmark

Why it matters: 2022 is constantly being compared to 2021, which was anything but normal, and year-over-year comparisons are painting a deeply negative picture.

Dig deeper: Assuming a fairly conservative 5.15 million existing home sales in 2022, the comparison to last year is a sobering 16 percent drop — but 2021 is an outlier, not a benchmark.

• Compared to the historical average of the previous eight years (2012–2019), transaction volumes in 2022 would be down only 0.9 percent.
• By contrast, compared to the same historical average, transaction volumes were up 9 percent in 2020 and 18 percent in 2021 — notable outliers.

• This massive increase is being driven by rising home prices.
• It would take a drop to 4 million existing home sales for the commission pool to hit what it was in 2019: $73 billion.

• Issues of home affordability, dropping sales volumes, and rising interest rates are all contributing to a challenging 2022.
• But, if we consider 2021 the outlier and not the benchmark, the market in 2022 doesn’t look nearly as catastrophic as headlines suggest.
• In fact, from a business perspective, there is significantly more money flowing through the system (from commissions) than any year other than 2021.