What You Can Expect for Real Estate Markets in the Coming Year

The last two years have brought significant changes to the real estate market, including a large jump in home prices and a refinance boom due to low interest rates. As the market and world as a whole recover from the pandemic frenzy, we can expect to see some changes to the markets in the coming year. Of course, nobody can predict the future, but there are some trends that are likely to continue as well as certain changes from external factors like the predicted interest rate hikes. In this post, we’re going to go over some of the trends that we expect to see throughout 2022.

Prices will level off to an extent

One thing that is likely to happen from the expected interest rate hikes is a slow in rise of home prices. However, we don’t think the direction of prices will change completely. Instead after new interest rates are introduced, the rise in home prices will slow down to more manageable levels. This trend will be mirrored in rents as well, which have seen an even larger increase than home prices in recent years. Homes near high population areas may not see any lower pricing because of high demand, which brings us to our next point.

Demand will remain strong

The reason we don’t expect prices to go down is because supply is still not high enough to meet unprecedented demand. Although higher interest rates will certainly deter some folks from buying, competition will still be fierce, and it will still be a seller’s market. You can expect homes to receive multiple offers, and quickly. Essentially, demand is set to remain strong until new construction is able to catch up with it. The problem is that supply chain issues and rising material costs put a hamper on the rate of new construction. This also leads us to our next prediction.

Refinancing will see a drop, but new construction will steadily increase

Naturally, one consequence of rising interest rates will be a drop in refinance loans and an end to the refinance boom of recent years. Instead, you can expect the rate of new construction to steadily grow as the market adjusts to meet demand. We also believe material costs will return to somewhat normal levels as the world recovers from pandemic frenzy and supply chain issues lessen. This, combined with investors looking to capitalize on unprecedented demand, will be the main factors leading to a rise in new construction.

Buyers will need to be on their game

One thing is for certain, buyers will need to be swift and resourceful in the new real estate market. Of course, each property will need its due diligence, but buyers will also need to be decisive and submit offers quickly to get a good deal. You can expect homes to receive offers well above asking price, so if you are in the market for a property you should familiarize yourself with local pricing to ensure you don’t overpay. Finally, we expect buyers to continuing to leverage technology for home purchasing, and sites like Zillow and Realtor.com can expect to see continued growth in the coming year. We believe these can give investors a huge edge, so if you aren’t already using technology in the real estate space now is the time to catch up.

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