Real estate is a constantly evolving landscape that features many ebbs and flows over time. Many people with even a casual interest in homebuying or renting may have noticed that the housing market in many areas is booming and has continued strong since the onset of the COVID-19 pandemic.
Bryan Talbott —a real estate professional operating in Virginia —speaks to how knowledge of prevailing real estate trends can be helpful for contextualizing one’s housing search and realizing their options within the market. Here, Bryan explores real estate trends for the second half of 2022 and beyond that can help buyers and renters get a clear idea of the state of the industry.
Home Prices Remain on the Rise
One trend within the housing market that has remained consistent within several key areas is the rising costs of homes. 2020 saw the beginning of this trend, when demand for single-family homes shot up significantly while the supply of these properties dwindled.
There are many reasons why experts believe home prices will only continue to rise into the near future. The demand for single-family units is still increasing as individuals, couples, and small families acknowledge rising rental costs and explore the option of securing more space through home ownership.
Bryan notes that there is also a key factor at play in the rising of housing prices —the prices are not deterring buyers. Buyers are perfectly willing to pay above asking price for their dream homes in the current market, and there is also competition as housing giants are willing to pay top-price for certain sought after properties in cash. This push and pull combined with limited demand mean that many real estate experts do not currently see an end to the rising prices.
Inventory Issues Continue
Housing inventory has a symbiotic relationship with home prices, and experts believe it is unlikely that inventory issues will lighten up anytime soon. Bryan Talbott mentions that there are a variety of reasons why the low inventory for housing is expected to continue into the latter half of 2022.
One of the most cited reasons why inventory is low is due to the record low interest rates that many areas saw in 2020 and 2021. These rates, combined with the pandemic, inspired many house hunters to explore more affordable, suburban communities that were once considered commuter towns. These buyers came into areas with the capital to pay hefty down payments and the ability to pay well over asking price for properties.
Bryan Talbott acknowledges that interest rates are far from the only reason for the continued inventory issues. For example, there has been fewer new builds in many key areas, with the construction industry citing issues such as lack of qualified tradespeople and the inconsistency of building supplies due to supply chain issues.
It also is important to keep in mind that some homeowners just aren’t selling in the given economy. Sure, the current market is great for sellers looking to make a profit on their properties, but those without another place to live would be forced to try their luck in the incredibly competitive market that made that windfall possible.
Properties Within the Sun Belt Remain Popular
The Sun Belt — the 18 state stretch of land from California to North Carolina — has become an incredibly popular place for Americans to migrate over the years. In fact, about 75% of our country’s population growth since 2012 has been concentrated within this area.
Bryan Talbott and other real estate experts predict that this trend will continue well beyond 2022, as younger professionals seek out the region to secure more affordable housing, rent, lower taxes, and more space. Compared to certain urban areas such as New York and San Francisco, which have seen a notable decline in migration since the onset of the pandemic, these Sun Belt communities have seen a boom in population growth.
Of the cities located within the Sun Belt, many acknowledge that Dallas, Tampa, Austin, Phoenix, Nashville, and Denver are currently showing the most promise. There is a caveat to these developments, however, as an influx of transplants within these areas could have an impact on the communities’ housing inventory and pricing if the trend continues over time.
Inflation Will Color Potential Buyers’ Decisions
Many may have noticed the ongoing impact that inflation has had on goods such as furniture, electronics, clothing and — most recently — gas. Naturally, inflation is on many individual’s and family’s minds at this point and may color their decisions on whether to purchase a home in the current economy.
An interesting aspect of this recent trend is that experts are not yet fully aware of how inflation is slated to impact the housing market in key areas throughout the United States. Due to the fact that much of the competition for housing has continued despite high housing prices, it is likely that the real estate landscape will continue to be incredibly competitive into the foreseeable future. Still, some who were on the fence about buying a home may step down from the competition and hunker down in their current property in the meantime.
Investments in Digital Solutions See Growth
During the onset of the COVID-19 pandemic, digital solutions were implemented by the real estate industry to uphold some sense of normalcy and streamline the buying and selling of properties. This accelerated digitization is only expected to continue as homebuyers, sellers, and agents acknowledge the benefits that they can have for real estate.
Bryan Talbott cites that virtual capabilities such as virtual staging, drone videos, and 3D tours will continue to grow in popularity in the later half of 2022 and beyond. With the current speed in which houses are flying off the market in many areas across the country, these solutions allow for home staging to occur remotely. After all, many people in this current market — especially those who are relocating to different areas — are making the decision to purchase or rent properties sight unseen.
The Bottom Line
Bryan Talbott notes that, depending on where you live, the real estate market can be extremely competitive into the foreseeable future. Still, he maintains that growing one’s understanding of the current market in one’s area as well as ongoing real estate trends can empower those house hunting to make decisions that will benefit them for years to come.