As we move away from the high-bidding wars and astronomical rents experienced in 2021, Andrew Shader has a few predictionsfor what to expect in 2022. His analysis is based on the current trends we see in the market, among demographics and changes in work culture.
1. Buyers Will Re-Enter the Real Estate Market
In 2021, many buyers avoided acquiring homes due to high prices and competition. Real estate inventory available for purchase was low, as people held onto their homes in the face of uncertainty around the pandemic, their jobs, and interest rates.
The result was multiple potential buyers lining up for available properties. Bidding wars erupted, and the cost to purchase a home hit heights unimaginable before the pandemic.
As we go into 2022, more sellers will enter the market, leading to more homes available to buy. While prices will stay high, Andrew Shader believes we won’t see the jumps in 2021. Instead, there will be smaller, more sustainable increases in home prices and fewer bidding wars.
2. Economic Growth Will Continue
The economy roared back to life in 2021 after an especially tough 2020. This trend is expected to continue, with the federal reserve’s official forecast of economic growth reaching 3.3%. Continued growth and more available jobs will lead more people to purchase homes or seek to sell ones they have grown out of.
3. A Trend Towards Purchasing Homes in Smaller Cities
One of the major impacts of the pandemic was the move from traditional offices to work from home. While most companies expect a full return to the office or some sort of hybrid model, others have fully embraced the work-from-home strategy.
Individuals who can work remotely may purchase less expensive homes in smaller, suburban cities or metropolitan areas. This trend will result in a demographic shift of workers leaving expensive cities for areas with a lower cost of living. We can expect to see a significant shift of buyers to lower-cost areas such as Memphis, TN, and other less expensive areas throughout the Midwest.
4. Mortgage Rates Will Increase
The Federal Reserve has already indicated that interest rates will increase in 2022 to offset the effects of high inflation. We can anticipate an increase sometime in the first six months of 2022.
While this will increase the overall cost to acquire a home, buyers should seek to purchase as soon as possible while home costs are still relatively affordable. Prices will only continue to increase in future years. It’s essential to take advantage of the current circumstances and prices now.
About Andrew Shader
Andrew Shader is a real estate investor, developer, and entrepreneur based out of Fort Lauderdale. Shader started as an entrepreneur in the insurance industry before discovering his real estate passion: finding scalability in any vertical. Andrew’s real estate strategy specializes in finding value-added properties and increasing their property value by upwards of 60% — without needing to rely on future appreciation.
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