Real estate is an ever-changing industry. It can go up or down drastically fast, especially when the market is pushing in a certain direction. In 2020, we’ve all seen how a global pandemic can disrupt all forms of the economy. The real estate market was heavily affected initially until buyers and agents wisened up and took advantage of the opportunity. What this tells us is that the changing nature of this market isn’t going to stop anytime soon.
And because of the constant change and evolution in the real estate market, you must have the right information at your fingertips to be able to make smart decisions about buying and selling property for yourself or as an agent.
Let’s take a look at some expert-backed trends that we’ll most likely see in 2022.
Climate Events Could Continue to Drive Down Prices In Some Areas
Various natural disasters have affected the country such as unprecedented wildfires and even tornadoes that happened well towards the end of the year in 2021. These unusual weather events may continue into the next year, which affects the real estate market. There is less demand for properties near wildfire-prone areas, and the same goes for beach houses -which were considered prime properties before, because of hurricane and flood risks. The decrease in desirability for these types of homes drives down their prices, making it hard for sellers. This trend is already happening in parts of the country and can continue even though the nationwide boom presents otherwise.
Industrial and Manufacturing Properties Will Increase in Demand
The pandemic shot the already rising statistics of e-commerce to the skies. Online retailers, big and small, have turned to online business models to sell their wares. This shift to online and digital selling from the traditional brick-and-mortar shops has resulted in a different need in real estate. Industrial properties are more needed than a brick-and-mortar store, as an online store would find more use for storage than a showroom-type of setup.
E-commerce entrepreneurs are seizing industrial properties en masse to have a location for their goods, and with the continuous improvements in the logistics and delivery industry, this demand will not wane. This increased demand is projected to continue well beyond 2022, and more entrepreneurs and investors will be more competitive in acquiring industrial properties.
Rent Prices to Keep Rising
There is an ever-increasing demand for rental units throughout the country which is sure to continue rising through next year. With such high demands and not enough available rental units to supply it, rent increases are inevitable. Despite the continuous efforts to construct new properties, it nearly isn’t fast enough to meet the needs. Various factors affect construction pace too, such as construction materials being expensive, as well as the ongoing supply chain issue that has been affecting various sectors.
With these many issues compounded, there’s no hiding the fact that rent prices will continue to go up. This may be good for rental property owners as it means a bigger payout for them, but it has an apparent negative impact on renters, who can do very little as their wages get allocated more towards rent and less toward other needs.
Mortgage Will Continue to Increase
Over the past few years, mortgage rates have been increasing steadily. But in 2021, they remained relatively low. However, it might just be time to start looking at better mortgage loan rates because 2022 is predicted to have a significant increase. In addition, interest rates are also predicted to rise around the world, which could mean that home prices will increase as more people try to buy homes and compete for them.
What this means: If you are planning on getting a new home loan or refinancing your existing one before the end of 2020, then you should consider doing so sooner than later, especially if you can afford a bigger down payment than the 20 percent you’re currently required to pay on the principal balance of your loan right now. Many signals point to a seller’s market in 2022, so it’s wiser to be proactive but careful when it comes to your real estate decisions.
More trends will pop up in the following months. It’s critical to be vigilant and observant as to what these trends may be, so we can all adjust accordingly. Of course, these four trends are an extension of the events that happened in the past few years, and a direct result of those events. Ultimately, what matters is we get to recognize global major events, and what their impact on the real estate industry can be.
