Published by Kartik Subramaniam
The U.S. real estate market changed significantly during 2020 and 2021 during the COVID-19 pandemic. The most obvious change is that many owners fled crowded cities to suburban and even rural areas fueled by the possibility of remote work.
A consequence of this was that home inventory was tight and prices soared. Buyers who were lucky enough to purchase and obtain financing in 2020 or 2021 enjoyed ultra low rates on their home loans. Many are wondering if the 2022 market will be tumultuous or if things will normalize.
The following are five housing trends to keep an eye on this year.
Realtor.com® predicts housing inventory will see a 6.6% increase in 2022, which is good news for everyone. More sellers are comfortable putting their homes on the market, and they’ll still enjoy a market that is favorable to them. However, it’ll be competitive since first-time homebuyer percentages are expected to outpace any recovery in inventory that occurs this year. Buyers will have more home options to choose from as more sellers list homes and new construction continues to be on the uptick.
Homes will still continue to sell quickly, and sellers will definitely retain the market advantage. Although, experts both concede and caution there may be levels of uncertainty ahead in 2022 and beyond.
Throughout 2020 and 2021, the U.S. experienced breaking-record mortgage interest rates, with an all-time low for a 30-year fixed mortgage occurring in January 2021 at 2.65%. This situation is slowly correcting itself, and rising inflation and consumer spending are contributing to the recent boost in interest rates.
While rates are still lower than previous years, early in 2022, experts predict interest rates will continue to inch back up throughout the year and with inflation rising at a record rate we may see rates get into the 6%+ range by summer of 2022.
As more housing inventory comes on the market and interest rates rise downward pressure on prices is likely. The best properties based on price and condition will continue to see bidding wars, but these might be more isolated.
As price appreciation finally slows down, this will result in some level of home prices cooling.
The COVID-19 pandemic sent everyone into isolation as people fled from city apartments and townhomes into the suburbs to buy homes, enabling them to have more space to work and play. As levels of normalcy returned in 2021, urban living has become more popular again, but the suburbs are still taking the real estate market by storm.
Realtor.com predicts urban areas will “continue to be pricier and faster-paced,” but people moving to the suburbs will receive “better bang for the buck,” especially since the housing inventory is creeping back up. Many Americans will continue to work remotely so this will play a significant role in their housing decisions – and many of them want the amenities and lifestyle suburban areas offer.
The COVID-19 pandemic sent everyone into isolation as people fled from city apartments and townhomes into the suburbs to buy homes, enabling them to have more space to work and play. As levels of normalcy crept back in in 2021, urban living has become more popular again, but the suburbs are still taking the real estate market by storm.
Whether you are taking our real estate courses by Zoom or self study, you already know that technology plays a significant role in the real estate market. Don’t expect this to slow down as tech-savvy millennial buyers dominate the buyer pool and the older members of Gen Z are right behind them. These two generations are highly drawn to tech and have come to expect it in most areas of life.
Today’s buyers expect the ability to hop online, increasingly doing so from their mobile devices, to find, view, and purchase homes. Using features such as 3-D virtual tours, interactive floor plans, and other types of touchless services will continue to be the norm. I wrote an article about the use of Matterport cameras when COVID first hit, feel free to check it out.
Additionally, technology will play an important role in other aspects of the home buying process, such as obtaining mortgage approvals and home appraisals through digital channels. Agents are also getting into the action with digital transaction management tools – the market can also expect to see more data analytics and artificial intelligence integration.
The year 2022 will continue to be a hot market like the previous two years but appears to be on the road to normalization. Bottom line, the U.S. real estate market should essentially expect a whirlwind year with some hiccups. If so, this will be due to the pandemic continuing to play a role in market demands, along with supply chain and labor disruptions for new housing.
An important thing to remember is that whether the market is appreciating, declining or staying flat, real estate agents are simply in the middle of a transaction. Up or down we still get paid.
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