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Posted almost 3 years ago

Real Estate Investors Take Note: 2022 Market Trends & Predictions

This year has been particularly hectic for essentially every sector of the global economy—the real estate market included. It’s hard to believe that 2021 is drawing to a close. The past twelve months have been packed with skyrocketing home values, the resurgence of bidding wars, and historically low mortgage rates. Inventory levels plummeted, while extended foreclosure and eviction moratoriums only functioned to make an already challenging dynamic even more complex. All in all, it has been a memorable year.

Many real estate professionals are wondering if 2022 will be more of the same. Will there still be unique challenges and hurdles for buyers and investors to navigate? Here’s a closer look at what’s anticipated in the coming months and what real estate investors should keep tabs on in order to stay ahead of the curve.

Escalating Foreclosures

Although the financial implications associated with COVID-19 are well-documented, there has not been a notable increase in foreclosures in the past 18 months due to the national foreclosure moratorium. That large-scale eviction ban hit its expiration date in July, however, and foreclosure rates have already started to ramp up.

Per a study conducted by ATTOM Data Solutions, during the 3rd quarter of 2021, there was a substantial uptick—to the tune of 68%–increase in foreclosures since the preceding year. While the actual volume is still considerably under historical averages, foreclosures are expected to continually rise over the course of 2022—especially as the number of homeowners that are exiting forbearance programs increases. There are hundreds of thousands of these individuals whose forbearance initiatives will expire over the next two months, meaning there is a good chance the percentage of borrowers that will default on their loans will increase.

Stagnating Listing Prices

It’s no secret that home values have shot up during 2021. According to a new market analysis by the Federal Housing Finance Agency, prices increased 18.5% in the past year alone. The good news for aspiring homebuyers and investors alike is that these dramatic price fluctuations are not expected to last much longer. While a decrease in property prices isn’t forecasted, the majority of real estate analysts predict that prices will appreciate much slower in 2022. For instance, CoreLogic is expecting a 2% increase by September 2022, and Freddie Mac has projected a 7% uptick this year.

Increasing Mortgage Rates

Due to the ongoing tapering of mortgage-backed securities by the Federal Reserve in response to escalating inflation, the general consensus is that mortgage rates will rise in the near future. Rates have already started to creep up, with the median 30-year fixed-rate mortgage increasing significantly over the past few weeks. While Freddie Mac reported subsequent small decreases—3.07% to 2.98%–the past month, economists say this is an isolated blip on the radar. Although mortgage rates declined after increasing for several weeks consistently, they are anticipated to rise steadily as the Federal Reserve tempers its stimulus response. According to data released by The Mortgage Bankers Association, rates will rise gradually throughout 2022, averaging 3.3% in the first quarter and topping off at 4% by the close of the year. This is expected to have a follow-on impact of reducing the number of aggregate loan originations as well.

Improving Inventory Levels

One of the most notable challenges for real estate professionals this year has been the drastically reduced inventory levels across the nation. Demand far outstripped the supply of homes—leading to contested bidding wars and fueling a rapid increase in listing prices. In 2021, inventory dropped to its lowest ever metric, with merely a 3.5 month supply of available properties—which means that it would take only 12 weeks for every single home on the market to sell. Although 2022 won’t likely mark a complete rebalance of the inventory, aspiring homebuyers can expect some degree of relief as developers work to build new homes to meet increasing demand.

We are here to help and educate our investors on their real estate goals. Express Capital Financing can help you close in as little as 5 days. We look forward to partnering with you in 2022 and helping you get access to fast capital to secure your dream real estate investment.



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