Real Estate Trends to Watch 2022
The past couple of years in real estate have been a roller coaster. In most areas the real Estate market is experiencing record low inventory levels with home prices soaring. Staying up to date on the trends that could potentially affect the market is important if you are thinking about buying, selling, or investing. The National Association of Real Estate Editors had a conference where they discussed what real estate trends to watch in 2022, for more information read below.
Ibuyers
For those of you who do no know what an Ibuyer is, it is basically real estate companies that allow consumers to buy and sell on demand. They will buy your home for a price that their algorithms say is correct, allowing you the freedom of making non-contingent or cash-like offer at will (IIyce Glink and Samuel J. Tamkin).
Certain Ibuyers are shifting into business models. For example Knock has become a mortgage lender. This company will preapprove a mortgage for you and provide you with a bridge loan for a down payment. They will help you get your home prepped and ready to sell and if it does not sell, they will buy it for you.
Ibuyers are not for all companies, Zillow adopted it and stopped it in the beginning of November because they acknowledge the potential loss of millions of dollars. IBuyers can cut workforce by 25% which is not great (IIyce Glink and Sammuel J. Tamkin).
Interested Rates Soaring
A history of interest rates: in 2010 a 30 year mortgage interest rate was around 4.69 percent and fell to 3 % by 2021. They stayed in the 3% range until the of 2018. In 2019 mortage rates hit 5.39 but quickly fell back down in 2020 to the 3% range again. When the pandemic hit interest rate dropped below 3%.
The question is what will happen now? It is predicted to rise by Lawrence Yun the chief economist of the national Association of Realtors, and Mike Fratantoni, the chief economist of the Mortgage Banker Association (IIyce Glink and Sammuel J. Tamkin). Experts are predicting in 2022 the average mortgage rate will be around 3.5%.
Real Estate trends to watch 2022: Millennial and Gen Z
Interest rates are rising making it almost impossible for millennials and Gen Z to purchase a first home. U.S home values appreciated at an annual rate of 18% in October according to CoreLogic. The highest level recorded in 45 years. This kind of growth is unsustainable, especially since home prices closely tie to income (IIyce Glink and Sammuel J. Tamkin). People will either have to earn more money or interest rates will have to stay low in-order from the next generation to be able to invest in the real estate market.
With home prices and interest rates soaring, you will see more first-time home buyers opting to rent or buy townhouses, condos or single family detached homes. Developers are making affordable and on the high-end side. Why buy a million-dollar home when you can save lots of money on a condo.
Information from The Washington Post.
Our Blog is updated weekly!