Key Real Estate Trends In 2022! Why Are They Important For Real Estate Investors?
Key Real Estate Trends In 2022!
Why Are They Important For Real Estate Investors?
After a historic year for the multifamily housing market in 2021, 2022 did not only continue in the same fashion, but it is posting even more impressive performance.
With the shifting macro environment and geopolitical issues, real estate investors are looking to make an optimal balance between maximizing their returns and achieving better safety of their invested capital.
Which will be the key trends in the real estate market for 2022, and how will they impact real estate investors?
Shifting market preferences
Single-family housing prices are projected to remain high and supply constrained as more individuals move to the suburbs and try to buy a home.
The demand for homes will continue to be fueled by low mortgage rates.
Meanwhile, the rental property market in major cities could continue to decrease, creating chances for real estate investors anticipating a post-pandemic resurgence of city life.
A rise in mortgage rates and an increase in house supply as development catches up with demand are both signs of their reversal.
Growing demand for single family homes is creating shortages
Buyer demand for single-family homes is increasing as people migrate from cities to the suburbs.
Another development is Millennials starting the home ownership phase in their lives, which adds to the rising demand for housing.
Suburban development is also being fueled by millennials eager to buy their first home or start a family but are willing to compromise on the location in order to receive more space for their money.
As a result, the supply of single-family homes is at its lowest level in nearly 40 years. While these conditions persisted through 2021, it is unclear how long they will last beyond that.
The market is expected to eventually stabilize and the pace of new construction will likely catch up with the increased demand.
Changing rental market landscape
The rental market for both residential and commercial properties in big cities was on the decline, partly due to relocation of people from cities to suburbs.
While rental vacancies increased in larger cities, demand for rental properties is actually increasing in mid-size and smaller communities across the country as demand for houses outpaces availability.
This market shift is creating attractive investment opportunities for real estate investors.
Investors can buy distressed rental properties now, anticipating a return of renters to major cities once the pandemic is over, and reposition them to meet the shifting demands and preferences of renters.
Unoccupied commercial real estate, such as hotels and retail buildings, can also be repurposed into housing units by real estate investors that can collect the rewards in this process.
Booming Sun Belt popularity
The Sun Belt is exploding in popularity.
The pandemic only added to the Sun Belt’s growing popularity, which is anticipated to continue for the foreseeable future.
The Sun Belt states have accounted for around 75% of the country’s population growth during the last ten years.
Aside from its appeal to retirees, the region is becoming increasingly appealing to younger professionals as a result of lower taxes and more inexpensive house costs and rent.
Furthermore, even the largest Sun Belt cities have more space than top US metro areas and the Sun Belt’s real estate markets have benefited from the region’s growing population and relocation.
The expansion has extended beyond single-family residences to include multifamily dwellings and commercial real estate.
Rising suburban interest
The COVID-19 epidemic has driven suburban migration from large cities.
Once the US is firmly on the other side of the pandemic, the largest metro regions, are likely to show strong performance. However, the trend of people choosing not to live in big cities may continue for the next 3-5 years.
The shift is being driven by two factors: necessity and choice.
Those who have lost their jobs and can no longer afford the high costs of living in big cities are looking for more affordable housing options, while wealthier residents relocate based on their personal preference to live in a peaceful environment where they can enjoy attractive amenities and be in touch with nature.
Substantial part of those who move away from the metro areas to the suburbs, are looking for suburbs that still offer some of the big city feel but can still offer them more space and better amenities for their money.
Multifamily properties that are able to offer these perks to future renters will be clear long-term winners.
As an additional enticing bonus, lower taxes and lower housing and rent prices make the suburbs an appealing destination.
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About Adivo Construction
We are a national general contractor with over 50 years of combined construction expertise specializing in the value-add improvements of apartment communities.
Our mission is to assist our clients in finding the right balance between capital expenditure and appreciation potential by designing and executing customized renovation programs that are focused on increasing cash flow return and overall return on investment.
We have completed over 100 repositioning projects for publicly traded and privately held domestic and foreign companies in states such as Florida, Texas, Kentucky, Oklahoma, Georgia, South Carolina, Utah, North Carolina, Tennessee, Indiana, Michigan, Missouri, Arkansas, Ohio, Arizona, Nebraska, and Kansas.