Real Estate Market Post-Covid Outlook 2022

In this article:

  • Real estate market influencers
  • Real estate investment predictions for 2022

This is a follow-up article to one we published earlier this year: Real Estate Markets & Coronavirus: Construction & Home Buying In a Post-Pandemic World.

The real estate market constantly changes. One factor that exacerbated the volatility of the market was the COVID-19 pandemic. We saw unprecedented changes during the opening month of the pandemic:

The rebound continued, and home sales and prices have hovered around historically high rates.

The trends will not continue in 2022. The world is shifting back to normalcy, and the real estate market has adjusted accordingly. As a real estate investor, your livelihood relies on your foresight and ability to capitalize on the evolving market.

What real estate trends will you expect to see in the final months of 2021 and into 2022? Below we outline what’s likely to occur and the influences that lead us to our predictions.

Real Estate Market Influencers

What causes a change in the real estate market?

  • People
  • Money
  • Interest rates
  • Legislation

As a real estate investor, you must know the fundamental principles that drive change in the housing market. Once you understand the principles, you will identify trends and adjust your investment strategy to match those trends.

People have an impact on the real estate market.

The demographic makeup of the United States affects the housing market. You can use demographic data to answer questions like:

  • Who are the buyers?
  • What are they buying?
  • Why are they buying?
  • How much are they buying?

For instance, The National Association of Realtors released a trends report that identified Millennials as the largest share of home buyers. Millennials aged 22 to 40 who are in their peak buying years will migrate out of cities in favor of suburban areas. The ability to work from home, growing family sizes, and the desire to have a yard have driven this suburban migration.

Money makes the world go round, and this is true for real estate markets as well.

Housing markets generally reflect the overall health of the economy. Loss of employment displaced people and work from home opportunities contribute to an increasingly mobile population. As a result, short-term rentals exploded in popularity because of their flexibility.

Read more here about how short-term rentals are gaining in popularity and make for excellent real estate investments. If you maximize your profits and cash flow, take a look at our strategy guide for real estate investors.

Interest Rates impact a buyer’s ability to purchase a home.

Bankrate’s current mortgage interest rates as of October 20, 2021, are:

  • The average 30-year fixed-rate mortgage is 3.22%
  • The 15-year fixed-rate mortgage is 2.45%

The increase represents a three-month upward trend from July when rates were 3.04%.

As mortgage interest rates increase, it becomes more expensive to secure a mortgage which lowers demand and prices in the housing market.

On the contrary, it is cheaper to get a mortgage when mortgage rates drop, which increases demand and price in the real estate market.

The Mortgage Bankers Association forecasts a rate increase to 4% for a 30-year fixed mortgage rate in 2022. However, even with a higher interest rate, the MBA predicts the growth of mortgages to buy a home.

Legislation influences the real estate market.

The government enacts policies that have short-term and long-term ripples in the housing market. Either state or federal governments may provide homebuyers with:

  • Tax credits
  • Deductions
  • Subsidies

Be aware of these mortgage policies to stay up to date with the factors impacting the market.

A central government policy that will affect the housing market in 2022 is the end of the moratorium on evictions. On June 24, the Biden administration extended the moratorium until July 31, 2021.

People had until September 30, 2021, to request a forbearance. For some mortgage holders, there is an additional three months of protection. For now, the only properties moving into foreclosure are vacant or abandoned properties. But that is set to change.

Why Does This Matter To You As A Real Estate Investor?

If a foreclosure started this minute, it would not resolve until mid-2022. There is a backlog of foreclosure homes that needs addressing before a current foreclosure can process.

As a result, there will be a wave of foreclosed single-family homes well into 2022. The foreclosures create a buying opportunity in local housing markets if you can secure funding or have cash on hand to buy once the backlogged inventory enters the market.

Are you ready to take control of your financial future with real estate investing? If so, read our beginner’s guide to real estate investing for incredible tips.

Three Real Estate Market Predictions For 2022

  1. Single-family homes will appreciate because of the principle of supply and demand.
    1. There is a shortage of 5.2 million new homes in the US and indicating a low supply.
    2. Homes perform multiple duties: office, home, gym.
    3. There is increased demand as Millennials are in their prime home-buying years.
  2. Buying a home will be difficult.
    1. Construction supply chain issues are contributing to an affordable housing shortage.
    2. New construction homes cost, on average, $298,432.
    3. This price puts new construction homes out of reach for most buyers.
    4. The mortgage rate will increase to 4%, making it more expensive to buy a home.
  3. More people will have to live in rentals.
    1. There is a housing shortage.
    2. Homes are more expensive and unaffordable.
    3. The trend towards renting is growing and will continue to grow.
    4. Rents are increasing and will continue to increase.

Key Takeaways

Although the housing market constantly changes, identifying real estate trends maximizes your investment earning potential. Currently, the market favors sellers–demand is high, and prices for homes are even higher. Millennials are moving out of cities and into suburbs, looking for a house and office combo that suits their remote working needs. Your knowledge of these trends will result in smarter investment decisions and a higher return on investment.

Royal Legal Solutions keeps our clients informed of real estate investing trends. In addition to providing valuable insights for structuring a real estate investing business, we guide clients through the process of growing it in a scalable and easily manageable way. To find out if you could benefit from our services, take our financial freedom quiz

Discuss the legal safety of your real estate investment portfolio?

Give Our Real Legal Team a Call Now!

(512) 871-0843