Real Estate and Housing Market Predictions for 2022
2022 is roaring in like a lion. With low mortgage rates and potentially more sellers hitting the market, things may trend towards a more normalized market that benefits buyers. The pandemic created obstacles that we believe created massive opportunities for real estate businesses, and now is the time to capitalize on the eagerness of home buyers who are looking for their perfect property. Below, we share our real estate market predictions for 2022 and the extended future.
Real estate market predictions for 2022 and beyond
Buyers will have a better chance of finding a home in 2022, but they’ll still face stiff competition in a seller’s market. As competition to find the perfect property stays high, home sales will continue to go through the roof.
We’re predicting the real estate market will remain hot this year, but inventory will stay low. The already-high value of homes is not likely to start falling anytime soon, but the balance between buyers and sellers will begin to shift to a more normal market.
As more homes filter into the market, prices should level off. But watch out! We’re currently seeing historically low interest rates, and if they begin to increase they could cap the buying power of potential clients.
Supply and demand in the U.S. housing market
The need for more space, schooling opportunities, and livability combined with low interest rates are driving demand in the real estate market right now. According to Fannie Mae, we are seeing an almost 50 percent shortage of homes compared due to the unusually high buyer demand.
The inventory of available property is making a slight rebound but remains limited. Experts predict that the shortage of homes will continue for several years to come as supply chain issues continue throughout the country. Some investors are even listing rental properties, including luxury properties, on the market to take advantage of the high listing prices.
The lack of available property means there are often multiple bids on properties, even within the same day. Buyers who come to the table with all-cash offers or without contingencies will have the edge in the 2022 market.
Buyers seek additional square footage and livable space
Things are changing as far as what buyers want as well. These days, buyers are looking for places to call home. They want plenty of room for home office space and outdoor relaxation so they can move easily from work to backyard barbecues.
Living in the suburbs is still popular, and homebuyers are likely to shop for larger homes that have more amenities, outdoor spaces, and versatility built in. However, rising affordability issues may force some buyers to forego the extra space so they can stay within their budget.
The market battles high inflation
With an influx of buyers, home prices are being pushed to the max. Yet homes are still moving with lightning speed once they hit the market. This demand for homes and the lack of available property will force buyers to make quick decisions to win bids.
The threat of rising interest rates combined with high property prices could make once-affordable property unattainable to some prospective buyers. Does that mean it’s going to be difficult for any buyer to get financing? Not at all.
Lending conditions for high-quality borrowers remain favorable
Although interest rates may be on the rise soon, for the right kind of buyer, lending conditions are still good. Interest rates are averaging 3.12%, a difference of -0.6 percent from one year ago (Freddie Mac, FRED). Broader economic factors like inflation and overall credit availability could add pressure on consumer income levels.
Blockchain, cryptocurrency and the Metaverse bound
Blockchain, cryptocurrency, and the Metaverse are here to stay. Although there is still some skepticism surrounding blockchain, cryptocurrency, and the Metaverse among conservative money managers, politicians and corporate executives, the role blockchain, cryptocurrency, and Metaverse can play in the real estate market is poised to open up a world of opportunity. Here are some changes we see coming on the horizon.
Using blockchain can increase the security and speed of real estate transactions by cutting out the “middle-person”. Less reliance on intermediaries like banks and lenders would significantly reduce closing costs. In addition, algorithms will begin helping buyers and sellers streamline legal, documentation, and financing requirements. Blockchain can also document, store, and verify ownership stakes (or tokens), which can then be easily traded, sold, and liquidated.
Cryptocurrency has created the most significant wealth transfer of our lifetime. Many of our buyers have made home purchases transacted with crypto, wallet to wallet. In fact, in 2021, the mayor of Miami proposed a rule that will allow residents to pay property taxes or city fees with cryptocurrency. Eventually, we envision a world where a considerable amount of real estate transactions are completed using crypto.
We also believe the time is coming when a much higher percentage of real estate transactions are conducted virtually through the Metaverse, then completed using cryptocurrency with contracts that are recorded using blockchain. We see a future for Web 3.0 (the convergence of the Metaverse, crypto, and blockchain) that not only transforms the real estate industry, but the entire world.
Mobile-commerce sales grow
One positive from the pandemic was the adaption of the digital experience. This forced businesses and corporations to offer online options for their clients. In just four years from 2017 to 2021, $3.6 trillion in sales were conducted on phones and tablets, up from $970 billion in 2016.
For the 6.43 billion mobile users worldwide, the shift to online services is a welcome change. SERHANT. has already seen a shift to mobile-commerce sales, both in real estate transactions and in the success of our online courses. We can’t wait to see what else the future holds as we move forward in 2022!
If the real estate market aligns with our predictions, 2022 is sure to keep you on your toes! You will have to secure the homes your clients want quickly. This may mean encouraging them to be creative and flexible with their offers. Cash offers and no contingency will give your prospective buyers an edge. Cryptocurrency is taking the market by storm. Rising interest rates and increased inflation will start to price buyers out of certain markets. Encourage your buyers to have the funding available and be ready to make the offer!
Want more tips on selling in a seller’s market? Take your real estate game to the next level so you are prepared to serve your prospective clients and their needs by arming yourself with the knowledge found inside our online course, How to Sell in a Seller’s Market.