What are the Current Real Estate Housing Market Trends?
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. With many changes taking place in the real estate market, there are significant trends for homeowners and investors to look out for.
Keep reading to learn the real estate housing market trends homeowners and investors need to be aware of.
1. Rising Mortgage Rates
It’s no secret that mortgage rates are bound to rise (if not already rising) in the near future. In comparison to 2020, when most people were stuck indoors, rates plummeted. Across the US, mortgage rates reached a record low.
In the previous year, the average 30-year mortgage rate was 2.93%. By the end of 2022, rates were predicted to rise by 4%. 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 the impact is not significant to the extent that investors need to reduce or divert funds away from the real estate industry.
2. Increasing Home Prices & Rents
With the rise of mortgage rates, it would be normal to assume that there would be cuts to offset the rents. However, this is not the case. 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.
Construction is 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 beyond 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.
To be successful in selling houses, make sure you prepare your marketing strategy adequately to reflect the real estate housing market trends. Finding the right homebuyers is crucial to selling your property. Regardless of how bad the market is, there are always investors purchasing homes. You just need to find them!
3. Property Meltdowns
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 of real estate housing market trends.
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. Once you look at multi-family 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.
4. Reducing 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, Brotherly Love Real Estate can help you close on a property in as little as 21 days with no closing costs. Home-selling tips go a long way when there is a real estate trend of reduced demand for properties.
5. Changing Employment Market
The US has been improving the employment landscape by creating 2.4 million jobs. This has taken the unemployment rate down to 3.6% of the 22 million jobs lost at the onset of the pandemic.
Overall, 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 country continues to move back toward traditional employment levels.
6. People Moving From Urban Areas
As a result of most people losing their jobs, which is a significant pandemic trend with implications, many 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 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.
7. 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.
8. Lifestyle Changes
After the pandemic, there had been a lockdown in different parts of the country and the world. The reopening started earlier in some areas than in others. Travel had been significantly restricted, but people are now taking the vacations they put off for the last two years. They are 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.
Summary
With the new real estate housing market trends, property investors have to keep abreast of how properties are impacted. As is the case that 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.
At Brotherly Love Real Estate, we buy 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. Our team of experts are happy to help!