The Real Estate Trends You Should Know About
The real estate economy and investment look different in 2022 than they did a couple of years ago. On the brighter side, these new tendencies have resulted in both positive and negative outcomes. Although inflation and interest rates are the big news items, investors shouldn’t look past the many other trends’ influences. Also, the rate of homeownership since 2016 has risen. As a lot of changes have been happening in the real estate market, there are significant trends for homeowners and investors to look out for.
That said, here are some of the most recent biggest real estate trends happening that investors and potential homeowners need to be paying attention to.
The Rise Of Mortgage Rates
This is not a big secret, but mortgage rates are bound to rise in the near future. In comparison to a year and a half ago in 2020, when most people were stuck indoors the mortgage rates plummeted. The mortgage rates had reached a record low. In the previous year, the average 30-year mortgage rate was 2.93%. It is predicted that the rate might go up to four percent by the end of 2022. Although this is an increase, it will not stop the acquisition of homes. Mortgage rates are going to increase, but in a historical context, they are still incredibly relatively low. It does change the cost of money and financing but not significantly to an extent that investors will need to reduce or divert funds away from the real estate industry.
Increase In Home Prices And Rents
With the rise of mortgage rates, it would be normal to assume that there would be cuts to offset the rents but that is not true. Home sales prices will continue to increase as the expected home sales volumes increase another 6.6%. The rent prices are seen to be rising more steeply than home sales prices and this is due to the 5 million housing units deficit in the United States. The household formation is exceeding the new home construction. This is due to the fact that the new home construction has gotten its feet back under them. They are striving to catch up but they are no match for the rate of household formation and income growth. It is expected people will get an increase in their income this year and even with the rent rising, home sales volume might still increase by the end of 2022.
Even if property values are going down, it’s important to know that you can still sell your home in a cooling market. Of course, it requires more tact, strategy, and effort to get it done. Getting to the closing table is getting more difficult for home sellers are the market shifts. Make sure that you prepare your marketing strategy adequately. Finding the right home buyers is crucial to eventually selling your property. Regardless of how bad the market is doing, there are always investors purchasing homes. You just need to find them!
Property Meltdown
Homebuilder information gives an in-depth look into the future and is based on the data of the house. The market is in a meltdown according to the most recent reports. Home building costs and high inflation are causing many builders to halt construction because the cost of the land, construction, and financing exceeds the market value of the home. On the other hand, 13% of builders reported reducing home prices in the last month to bolster sales and or limit cancellations. Actualcashoffers.com, a professional cash house buyer, stated that prices of the inventory they’ve recently sold have decreased by 20%. However, that’s just for single-family homes, and once you look at multifamily construction that number changes substantially with construction for five units or more rising by 15%. Rising rents create an incentive to build more rental units, even in the face of rising finance costs.
Reduced Demand
Interest rates are hurting demand. Demand might hit its lowest level in 22 years. Mortgage applications are down 21 percent compared to a year ago, and home sales have fallen for a while as the demand falls. Sellers might end up having to lower their asking prices as some home listings have already reduced their prices. It’s unfortunately more challenging to sell a home quickly in today’s market. If you are wondering how to sell your house fast check out this website to learn more about the process. Home-selling tips go a long way when there is a real estate trend of reduced demand for properties.
The Employment Market
The US has been improving the employment landscape by creating 2.4 million jobs taking the unemployment rate down to 3.6 percent of the 22 million jobs lost at the onset of the pandemic. 96% or 22 million of those jobs have been recovered and based on the current outlook there is a possibility of full recovery of all jobs that were lost. Cities and states that reopened first after the Covid lockdown made the strongest recovery but the ones that opened later also have been making good headway as time goes by. Real estate is slowly recovering and may gain momentum as the move back toward traditional employment levels.
The Move From Urban Areas
As a result of most people losing their jobs, which is a significant pandemic trend with implications, a lot of people moved out of the urban core. Although the media focused on long-distance moves to the Southeast, the majority of the movement was local people moving to the suburbs. That trend has been in motion for more than five years as the Millennials are getting to their 30s and began forming families. The trend was accelerated by the pandemic in 2020, where the urban apartment vacancy rates surged while suburban areas largely maintained occupancy levels as they were going into 2021.
The Urban Recovery
The urban areas were significantly impacted by the pandemic, but their recovery is starting to gather momentum. A lot will depend however on the strength of the economic growth over the next couple of years. The urban core real estate space demand is making steady gains.
Lifestyle Changes
After the pandemic happened, there has been a lockdown in different parts of the country and the world. The reopening started earlier in some areas than in others. Until recently, travel has been significantly restricted, people are now taking the vacations they put off for the last two years. They’re also going to sporting events, concerts, movies, theme parks, and other entertainment venues. Not everything is back to 100%, but the momentum is there and this has pushed hotel occupancy rates. Real estate catering supported by entertainment and other activities should continue to see a performance gain. Reinvigorated travel and entertainment needs will fuel numerous segments of the real estate market delivering growth potential.
Real Estate Trends To Look Out For
With the new real estate trends, there has been a lot to look up to for multiple businesses. As there is plenty to gain from, there is equally enough to look out for to avoid falling into a pitfall as an entrepreneur. Whether you need helpful tips for holding, buying, or selling property, the market has different trends that will affect your decision. To that end, the above are some of the most significant factors to consider if you want to wade through the real estate market in today’s world.
During turbulent real estate times, it can feel scary to know when to buy or sell a property. If you need to sell your home during a down market when trends are not in your favor, there is hope. Our company buys houses in any condition and can close quickly. Contact us today to learn more about how we buy houses in Philadelphia and other cities throughout the country. Brotherly Love Real Estate is here to help.