Over the past couple of years, the real estate market has been highly unusual due to the Covid-19 pandemic. As a result, even though real estate is known for being a stable and profitable market in the United States, we’ve seen some significant changes in inventory and prices across the country. Now that the year is coming to an end, investors wonder if the new year will welcome a more stable housing market. Keep reading as we go over factors that affect housing markets, rental investment strategies, and housing market predictions for 2022.
What Are the Housing Market Predictions for 2022?
Within the past couple of years, due to the Covid-19 pandemic, we’ve seen a decline in the prices of homes throughout the United States. Many people decided to take advantage of the declining rates and purchase a home. However, this created an issue with the supply and demand of homes throughout the country. There weren’t enough homes available to keep up with the increasing demand. Unfortunately, this caused home prices to soar at the beginning of 2021.
Now that we are approaching the end of 2021, we’ll likely see the market start to balance out within the new year. But that doesn’t necessarily mean that real estate prices will drop. In fact, they may stay at high rates, which will cause people to second-guess their decision about buying a home in 2022.
That said, if you are interested in purchasing real estate, don’t feel too intimidated by the unusual market. Even though mortgage rates are higher than average, there are some strategies you can use to purchase a home successfully. First, let’s go over some of the housing market predictions for 2022.
Market Trend Predictions for 2022
Although we don’t know exactly what will happen in 2022, we’ve witnessed many real estate market trends changes throughout 2020 and 2021. For example, mortgage rates were extremely low, and the number of home sales skyrocketed, surpassing 2007 sale rates. So with that, let’s look at some of the housing market predictions for 2022.
- Inventory Should Recover– The inventory for homes should make a comeback during 2022, despite the low supply we’ve seen in 2021. So for anyone who hasn’t been able to get their hands on a home, the new year may be a great opportunity.
- Homes Will Sell Fast– Since we saw such high demand throughout 2021, it’s likely that once more homes are available, they will sell extremely fast. That said, it’s wise to act promptly if you are looking to purchase a rental property within the following year.
- Rental Rates Will Rise– We’ve seen rental rates rise pretty rapidly over the past year. Although home prices are high, real estate investors continue to take advantage of the rising rental rates. Because of this, investors will likely continue to purchase homes due to high demand and high yields.
- Solid Returns for Investors– Those that were lucky enough to purchase a rental home at a low rate in 2021 will keep seeing solid returns from their investments. Likewise, investors that got in early enough are in a great position for the new year.
- Demand in Suburban Areas Will Continue Rising– Many people have shifted to a work-from-home setting due to the stay-at-home orders during the Covid-19 pandemic. This has caused more people to live in suburban areas since many employees no longer need proximity to work.
What Factors Affect the Housing Market?
Many distinct factors can affect the housing market each year. That said, investors need to know and understand what factors are relevant to keep them in mind when making a real estate purchase. Some of the most influential factors that may affect the market over the next few years include:
- Changes in the Economy
- Supply and Demand Changes
- Mortgages and Interest Rates
- Location of Property
Changes in the Economy
Since it’s one of the most influential factors that affect the housing market, the economy can set the tone for how well the market is doing. Indicators of where the economy stands include employment data, manufacturing activity, the average price of goods, and more. Keep in mind that when the economy is thriving, the cost of homes tends to increase.
Supply and Demand Changes
Similar to other goods and services, a change in the supply and demand can determine the price of a home. For example, if the demand for homes is high, but the supply is low, it’s referred to as a seller’s market. On the other hand, when the demand is low, and the supply is high, it’s a buyer’s market.
Mortgage and Interest Rates
The Federal Reserve is one of the most significant deciding factors on how low or high interest rates are throughout the year. Since we are currently undergoing inflation, predictions for 2022 imply that the Federal Reserve will likely increase interest rates, which increases mortgage rates also.
Location of Property
One of the most critical aspects of buying a home is choosing the location. Most of the time, the location directly correlates with the price of the home. Therefore, since they are more desirable, locations near schools, hospitals, shopping centers, and other attractions will likely have more expensive homes.
Strategies for Purchasing Your Rental Investment
Along with the housing market, the strategies typically associated with purchasing property have changed exceptionally over the past few years. Since the supply is low and the demand is high, it’s tough to find a rental that will be profitable. However, it’s not out of the question.
One tip for running a successful rental business is to have a good understanding of the market. That said, let’s look at some of the investment strategies you should adopt while making a real estate purchase.
What Should You Consider Before Investing?
- Where Do You Want to Buy?
- Are You Ready to Make a Purchase?
- Your Finances
- BRRR Investing
- How Will Daily Tasks Get Done?
Where Do You Want to Buy?
Knowing the area in which you are looking to buy is extremely important before making a purchase. Location is one of the most valuable factors in purchasing a rental property since demands and trends are higher in certain areas. Without looking into the location, you may have missed an opportunity for an excellent rental property.
Are You Ready to Make a Purchase?
Sure, you may have found a property that you’d consider buying, but if you’re not entirely sold on it—wait it out. Try not to cave in to pressure from your real estate agent when purchasing a rental property. Also, ensure that you have a plan, savings, and time to undergo the process smoothly.
Your Finances
You should have a thorough understanding of your finances before investing in real estate. If you don’t know how much you can afford and how much you’ll need to save up before purchasing, you should take a step back. This way you won’t run into a shortage of money once you get started.
BRRRR Investing
If you’ve never heard of BRRR Investing, it stands for Buy, Remodel, Rent, Refinance, and Repeat. This is an important strategy to consider because you can quickly build a portfolio while passively earning income at the same time. BRRRR is a quick way to purchase real estate fast, add value with renovations, create income while renting, then refinance and start over.
How Will Daily Tasks Get Done?
Without delegating your property’s daily tasks, it can quickly become an unwanted full-time job. This is especially true for seasoned investors who own multiple rental properties. As a result, many experienced rental investors hire property management to accomplish the day-to-day tasks of the property.
Rental Investment Success and Predictions for 2022
We’ve gone over a few strategies to keep in mind while investing in 2022, so now, let’s go over some ways to stay successful as an investor. Anyone can prosper in this field, but it takes time, money, and resources to do it properly. Below are some ways you can be a successful investor in 2022.
Treat It Like a Business
As you can imagine, owning a rental property is not the same as owning a personal home. Investing in rental properties is a business venture and should operate like one. After all, the goal is to make a profitable investment property.
That said, real estate investors should inevitably separate personal and business matters. For example, using separate accounts for rental properties, investing in helpful technology, and saving up for emergency expenses are all ways to generate success within your rental business.
Know Local Rental Laws
Knowing and understanding the local laws governing that area is vital no matter where you choose to invest. After all, location is one of the most significant factors for renters. However, investors should consider local taxes, licensing fees, rental restrictions, and housing regulations in the area.
Similarly, local and state housing laws directly correlate with landlord-tenant rights and responsibilities, so it’s essential to know these standards. Failing to comply with the law can result in fines or even suspension of your rental license.
Know When to Hire Professional Help
Although you may handle managing your rental property on your own, you don’t have to. For those who own multiple rental properties, you probably don’t want to. Luckily, many reputable property management firms are eager to help you manage your investments. If you’re struggling to complete all the day-to-day tasks of your rental property, it’s time to hire professional help.
Hiring a Reputable Property Management Company
One of the best strategies you can take advantage of for your rental business is hiring a trusted property manager. After looking at the housing market predictions for 2022, it’s safe to say that more people will be investing in real estate throughout the next year. That said, whether you currently own a rental property or you plan to buy one, consider hiring a property management company. For instance, the professionals at Bay Property Management Group are motivated to help you manage your rental property.
Offering several services like tenant screening, rent collection, and taking care of maintenance requests, the professionals at Professional Property Management are eager to help you run a successful rental business. Whether you are just starting in the rental property industry or you already own a fair amount of real estate, check out all the benefits of working with a professional property management company in Northern Virginia and contact us today.
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