What do experts forecast about the real estate market in 2022?
The real estate industry is in constant development and lots of factors influence it at the moment. Firstly, it is the pandemic that has changed the market greatly, but not only it is. Naturally, the economy and the appearance of the new buyers' generation called millennials make an impact too. All these and many other factors have led to the rise in home prices and a lack of inventory, so many people are afraid of the housing crash nowadays. Will it happen? Or should you prepare for any other challenges?
These ten trends from real estate experts will help everyone willing to sell or buy a home this year make the right decisions and avoid rough mistakes!
Being a rate influenced by Covid-19 homeownership has seen an unexpected rise in 2021. It has increased by over 3% for only a year or so to reach around 67.2% at the end of the year. These changes show that more consumers want to own homes and this is connected with concerns about safety and health, remote work possibilities, and many other things. Furthermore, the growth will continue this year as well though the lack of inventory will reflect on it too.
Experts say that buyers have changed their expectations by looking for a property with home offices, outdoor amenities, and more space. At the same time, the construction cost has increased greatly as well since only lumber prices have increased by 169%.
Low mortgage rates
One of the reasons why people continue to buy homes even if the choice is small is record-low mortgage rates. Covid-19 outbreak decreased them significantly and it encouraged over 54% of US residents to take advantage of this unique offer. Unfortunately, around 30% of such buyers regret this opportunity because of the financial issues faced though 43% of people are absolutely satisfied with the deal.
A steady rise in home prices
Predictions made before the pandemic said about the growth of home prices, but Covid-19 has speeded up this process greatly. The experts say about an average increase of 10% during the year. It happens even despite the decrease in mortgage rates and may be caused by tough competition existing in the market.
More millennials buy homes
Though it sounds unpredictable, the generations of sellers and buyers being more active in the market have changed too. If in 2020, the top of the seller list was taken by the Older and younger boomers and Gen Xers, this year could see a growth in the number of millennials who took the first place. Now they constitute 22% of all sellers thanks to stable earnings and interest in mid-class homes. The statistics say millennial homebuyers make a 38% share in the market.
The popularity of affordable homes
Rent has beaten home purchases by 18% before the pandemic, but the last one has encouraged more people to buy their own homes. At the same time, the growth of prices and a shortage in the listings resulted in the interest in affordable properties, first of all.
It's not a secret that 87% of home buyers prefer previously-owned homes and 31% of them do that because of the cheaper prices. What is interesting, 38% of buyers buy their first home since previously they rented property and now they prefer more cost-effective homes located in the suburbs. Experts predict that this trend will remain in the upcoming year as well.
Purchases in second-tier cities
A trend to live in the first-tier cities has been substituted not only by a huge population density and the spread of infections but also too pricey real estate. Therefore, buyers decide to move to second-tier cities where homes are much more affordable. It allows experts to suppose that the demand for homes in first and second-tier cities will soon be equal. Around 25% admit to the possibility of leaving metropolises and move to smaller cities, so the number of such people can only increase.
The real estate business is adopting new technology very actively and the number servicing them is growing too. One of the most innovative solutions that is expected to play a key role in the real estate business is artificial intelligence. It is planned to be used in building, management and design.
Furthermore, consumers tend to become more tech-focused as well. Around 44% of potential buyers use online listings to find a property, while 12% of people try to find information about the process of home purchases online too.
Mortgage rates keep on rising
Several years of calm in mortgage rates could see significant changes in 2022. Short-term interest rates have increased, and it has led to the growth of 30-year mortgages that reached 5% already. Experts say that the beginning of 2022 will see similar mortgage rates to the ones that had been before the pandemic.
Luxury home listings see an increase
Posh real estate is listed more often than previously and the main reason for that is interest in more affordable homes. Luxury home listings could see a great growth of over 31% and homes tend to stay in the market twice longer than they used before. Such a tendency may result in the drop of prices of such homes. Currently, it hasn't happened yet because of the low inventory level, but the probability exists!
Focus on amenities
The attraction of new tenants encourages landlords and property owners to undertake new approaches to improving amenities offered together with the estate. The focus is made on outdoor amenities caused by the pandemic and the smart homes that suggest saving on energy resources and improving the quality of life quality. Therefore, the customer experience of tenants plays an important role that makes 49% of real estate companies share data on amenities and not only.
All these trends can serve as a guide for both home buyers and sellers who plan to close deals this year. Their analysis may help people make the most effective and profitable decisions and benefit from them!