This article will find the seven most significant developments for the real estate US market in 2022 and beyond.
Suburbanization began before 2020 and is one of the primary factors driving these tendencies. However, the pandemic was hastened by the COVID-19 virus. Nevertheless, for the next 18-24 months, several other noteworthy shifts in the real estate sector are ready to be observed.
Let’s get to trends:
1. Digital Homebuying
The pandemic spurred digitization in all areas; real estate is no exception. Due to the pandemic and competitive property market in 2020. Many buyers were able to visit the property visually and predict how much is my home worth, thanks to virtual features such as:
- 3D Tours
- Drone videos
- Virtual staging
During the pandemic, home sellers could use Zillow to explore homes, contact agents, and study mortgage possibilities. Zillow and related companies provide 3D home tours.
Millennials, who rely on social media, use technology to learn about their new communities. Websites like Nextdoor help locals remain in touch and learn about neighborhood events.
2. The Suburbanization of The World’s Population
COVID-19 has spurred city-to-suburb migration. New York, San Francisco, and Washington, DC, all get affected. This tendency may continue for the next 3-5 years.
Necessity and choice are driving this transformation. Those who are unable to keep up with the rising costs of living have no choice but to leave, while the wealthy are relocating by choice. Unemployed people who can’t afford major city prices are moving to less expensive areas.
Some of these real estate trends are also driven by the shift to suburbs like the Sun Belt’s appeal, soaring property prices, and housing scarcity.
3. The Sun Belt’s Popularity Grows
Americans are leaving big cities for the Sun Belt. The pandemic boosted the Sun Belt’s popularity, which is predicted to last. Sun Belt states accounted for 75% of the country’s population growth in the past decade.
The region’s reduced taxes and inexpensive housing costs and rent attract younger professionals. Even the largest Sun Belt cities have more room than New York.
Relocation and population growth in the Sun Belt have boosted real estate.
4. Single-Family Home Shortages
Growing demand for single-family houses is a result of city-to-suburb migration. According to Redfin’s senior economist, single-family house searches peaked in 2022.
According to PricewaterhouseCoopers, single-family home demand is determined by the following:
- Low rates,
- Due to quarantine, social isolation, and telework, the home’s role is expanding,
- Pre-pandemic housing trends.
A second trend is that Millennials are entering the home-owning period of their lives, which adds to the demand for dwellings brought on by the epidemic. Millennials planning to buy a home or start a family boosts suburban expansion. The outcome is a 40-year low in single-family dwelling inventories.
5. Home Prices Continue to Rising
Current real estate trends are highly interrelated. Due to increased demand and diminishing availability, single-family home prices soared in 2021 and are predicted to remain high through 2022.
Shortly after the epidemic began, home prices plummeted, and sellers reevaluated their decision. After a couple of months, prices went up again.
The market for sellers was robust, and it seemed to continue so far beyond 2022. Buyers are unfazed by the high prices. To make a purchase some customers are prepared to pay significantly more than the asking price to make a purchase.
Rising housing prices have boosted homeowner equity.
6. Lower Mortgage Rates
2021’s record-low mortgage rates boosted homeownership. Mortgage rates reportedly hit a 50-year low in 2021; since reaching 4.94% in 2018, mortgage rates have been falling.
Mortgage rates touched a record low of 2.65% in January 2021; this generated a 10-month peak in mortgage applications in 2021.
Due to the pandemic’s economic impact, the Federal Reserve kept interest rates near zero in January 2021. Another rise happened in January 2021, when refinancing activity was 93% higher than in January 2020.
7. Falling Rental Market
The rental market for residential and commercial buildings in metropolitan cities declined in 2021, partly owing to suburbanization.
People who can afford it will buy a house, and those who can’t will look for ways to save money or fall behind on rent. Last year, more young professionals moved back in with their parents.
Pew Research says that in 2021, most 18-29-year-olds lived with their parents for the first time since the Great Depression. Migration out of big cities has increased housing vacancies and lower rental prices.
While vacancies are rising in major cities, demand for rental properties is rising in mid-size and smaller communities as housing needs outpaces availability.
In a Nutshell
It concludes our discussion of significant current trends in the housing market. Single-family housing costs are likely to rise as more people migrate to the suburbs to buy homes. Low mortgage rates will fuel homebuying.
The rental market in large cities will decline, providing possibilities for real estate investors planning for a post-pandemic resurgence of city life. Rising mortgage rates and construction catching up with demand are signs of a reversal.
This forecast isn’t set in stone but can guide you as a real estate buyer, agent, or investor in 2022.