For almost 2 years, the ongoing pandemic has put the real estate industry on hold. However, the housing market has bounced back without slowing down homebuyers’ activity. The high buyer demand has created fierce competition in medium-to-small metro and suburban areas across the US.
Despite uncertain and hard economic times, the booming housing market has compelled investors and buyers to wonder: where is the real estate market headed this summer?
If you have the same question in mind, we have you covered here. In this article, we explain what you should look forward to in the real estate industry this summer.
Where Is the Real Estate Market Headed This Summer?
For summer 2022, the real estate market will experience almost the same as 2021, although to a lesser degree. Market changes will still come from increased demand from buyers and more property selections. Continued renter affordability and low inventory problems might persist through the warm season.
The end of the year may begin to level out if the supply gets squared away. However, prices will continue to rise through the summer — even with interest rates ticking up and slowly pushing out buyers.
Real Estate Market Trends for 2022
The fast rollout of the coronavirus vaccine has made many people hope that the effects of the pandemic are diminishing. Some housing market trends will continue to rise in the coming years.
Here is a glimpse of a few trends that are all set to shape the housing market this summer.
- The interest rate can rise yet will remain comparatively low.
- Home inventory is expected to increase but will stay high in a seller’s market.
- Increased housing inventory yet low mortgage rates may push prices higher.
- Similar to suburban areas like Monrovia, there’s a high homebuyer demand in suburban and urban areas, although the number of people looking in the suburbs increased to 42 percent more than pre-pandemic levels.
- Rental assistance may ease eviction worries for tenants, although it will not diminish the long-lasting impact of the pandemic.
- The renovation boom will continue as Americans move into larger homes and take advantage of remote work flexibility.
- There’s an expected shift from multi-family to single-family rental homes.
Buying in the Real Estate Industry
The COVID-19 pandemic has driven mortgage interest rates to historic lows for 2020. This might sound bizarre to you, but even 2022 began with a record low for the new interest rate for thirty-year.
Realtor.com chief economist Danielle Hale says sales of existing homes will rise 6.6 percent, with 2022 having the second-highest sales in the past 15 years.
Moving forward, the mortgage rate of interest trended upward whereas remained low from an economic and historical standpoint. That is to say, the desire for a better space, low interest rate, and continuation of the new households in the USA increased demand for home buying in 2022.
The same demand seems to drive through the start of the current year. Most areas include the seller’s market, which means there are not enough properties available for the active buyers.
As of January 2022, the national inventory of active listings declined by 28.4 percent over last year. Despite that, the January median listing price for active listings increased to 10.3 percent. Experts also expect housing prices to climb 5.7% this summer.
Selling in the Real Estate Industry
One of the primary reasons for the low supply of properties on the housing market in 2021 was remote working. Homeowners who already had space for virtual schooling and remote working didn’t want to relocate.
Many homeowners were hopeful that the pandemic would end soon. That is why some sellers were more inclined to re-enter the market. In addition to this, the vaccinations increased consumers’ confidence, making home selling relatively less risky.
In fact, many sellers are looking for flat fee brokers to list their homes as experts expect inventory to increase in June and July as housing marketers head into summer.
National Association of Realtors chief economist Lawrence Yun says that home sales are the best they have been in 15 years. Although they don’t expect 2022 to exceed 2021’s performance, sellers may still get the upper hand when selling properties this summer, even if interest rates may balance the market.
It is important to note that these figures represent housing predictions on a national scale. The effects on the different housing markets may vary widely. Consulting an experienced and professional real estate agent will help you explore more about property pricing and activities in your area.
Renting in the Real Estate Industry
As mentioned above, the financial impact of the pandemic has not been kind to the rental market. Renter households are deeply affected by the shutting of restaurants, retail stores, and workplaces requiring personal work that people didn’t consider essential.
That makes tenants’ ability to afford rent a growing concern. The U.S. Centers for Disease Control and Prevention extended its renting and eviction moratorium to halt evictions for people encountering financial difficulties. It offered more time to the State government to distribute the federal rental assistance.
However, National Association of Home Builders chief economist Robert Dietz forecasts a six percent growth for single-family built-for-rent construction.
Although there is economic recovery, distributed rental assistance, and decreased cases of COVID, it is still unclear if there will be a reduction in mass eviction this summer.
Will Real Estate Go Up or Down in 2022?
Although the final data for 2022 is yet to be released, the real estate agents and housing market experts expect new property sales to get eight percent higher and current property sales to get three percent higher compared to 2020 and 2021. The housing market is likely to soar by 3.6 percent this summer.
The housing market has been relatively robust in 2021, and the same trend is expected to follow in 2022, with a potential increase in listings this summer.
Is It a Good Time to Buy a House Right Now?
While new and younger homebuyers will have a better chance of finding homes this summer, they may face a competitive seller’s market. Still, now is a good time to buy a house and invest in a property.
Mortgage interest rates fell to record lows in 2020 and 2021 due to the pandemic. With the mortgage rate relatively lower, you can benefit from your property purchase. Plus, your interest rates play an important role in the total cost of a loan.
Put simply, you can snag a mortgage to benefit from low interest rates to make it a good move. It is especially true if you live in California. According to Consumer Housing Sentiment Index 2021, more than 60 percent of investors believe this is the right time to purchase a home.
It is because many buyers are optimistic about the economic recovery in the state. They believe that the housing market in CA has become the hottest market as the median price has appreciated by 108 percent.
However, Bankrate.com chief financial analyst Greg McBride predicts that the 30-year fixed mortgage rate may peak at 3.75 percent during the year. Mortgage Bankers Association economists also expect a 33 percent decline in total mortgage originations in purchases and refinancing. Furthermore, mortgage rates may dampen the refinance volume.
Nevertheless, more and more people are stepping into the property investment business by listing their houses on MLS or Zillow. They seek assistance from professional realtors to sell the property at the desired price.
In a nutshell, 2022 seems to come out from the pandemic effects when it comes to investing in the real estate market, even when forbearance ends. The low-interest rates and more property availability allow many people to buy homes at fairly affordable prices.
Thus, make sure to discuss your case with a professional to get in-depth knowledge of your local housing market.