There’s no doubt about it: for years, the real estate market has dominated investment markets as one of the hottest, most lucrative, and most engaging investment forums. While undoubtedly rife with ups and downs, the real estate investment experience offers those who maintain a strategic approach the opportunity to come out on top with significant financial returns.
Still, there is an equally devastating investment-related loss for every potential real estate win. After all, the real estate market is anything but even-keeled historically. Unless you own a crystal ball, predicting real estate trends can be nearly impossible.
Luckily, major industry players opt to utilize technology to better forecast changes in the market. To make the real estate industry work for you, investors ought to get a grip on ever-evolving indicators. If you’re ready to invest your best in 2022, check out these top six real estate trends defining the forecast this year.
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Commercial lease rates may increase
During the COVID-19 era, substantial retail property vacancies caused office lease rates to increase in 2021. The situation made it harder for businesses and corporations to snag rental properties at affordable rates.
Real estate investors should note that due to the continuation of the COVID-19 pandemic and rising commercial property prices, many corporations have considered (and will continue to consider) implementing virtual address solutions.
Smaller cities will continue to attract homebuyers
Experts note that small-city housing markets will continue to grow as more individuals embrace the geographical flexibility offered by fully remote work. No longer bound by the need to prioritize painless commutes to the office, more and more homebuyers are taking advantage of their newfound freedom by purchasing in cheaper, less densely populated neighborhoods.
Interest rates will continue to rise
The Federal Reserve promised to keep interest rates low until:
- Inflation reaches 2%,
- Joblessness falls to 4% or less, and
- The economy expands and stabilizes.
The Fed is considering raising interest rates before 2023. If such a raise takes place, mortgage rates will likely begin increasing.
Real estate technology will expand
To save on closing costs, time, and hassle, buyers have become increasingly interested in technology-based real estate transaction services. Software developments have substantially changed transaction trends post the COVID-19 pandemic, and the real estate market is no exception.
The home-buying market will remain competitive
Like in 2021, forecasters predict that the 2022 home-buying market will remain brutally competitive. Real estate investors have low mortgage rates, increasing home prices, and a lack of inventory to thank.
The National Association of Realtors predicts home prices will increase by 4.2% in 2022 due to increased demand and low inventory levels, and Zillow notes that home values could rise to over 3.5%. For the foreseeable future, the real estate scene remains a seller’s market. Luckily for buyers, forecasters estimate that while prices may remain high, inventory will likely expand in months to come.
Rental costs will increase at a slower rate
It’s no secret that over the last year, rent prices have soared. Amid pandemic-induced financial challenges, many renters have faced unbearably costly rent payments. The typical renter paid $1,842 per month for a two-bedroom apartment in October 2020.
However, forecasters note that the trend may be slowing, even if only slightly. While rent prices will likely continue rising in 2022, most forecasters agree that the increase will become slower and less intense.
With plenty of obstacles to overcome on your journey to making a strategic real estate investment, you can still hold out hope that with the appropriate knowledge of real estate trends, you’ll find yourself signing papers for lucrative investments in no time.