Do you wonder what real estate market trends affect landlords this year? Do you wonder if your investments will make a profit this year? This article gives you the lowdown of the latest rental market trends for 2022.
The first quarter of the year has undoubtedly been eventful, with exciting trends that reshape the market’s landscape. Real estate might be stable in the long run, but the industry is subject to fluctuating elements that can increase or decrease your income. Thus, it’s essential to talk to a professional management company that can help you leverage the latest developments.
2022 Rental Market Trends
Rising Interest Rates
Before Covid-19 came on the scene, interest rates were set to rise. However, when the pandemic hit, grinding the economy to a halt, the government had to step in. The Federal Reserve set up policies to cap mortgages and prevent landlords from crippling under the burden of unpaid rent. By the end of 2021, these policies were no longer sustainable as the economy bounced back in full force. Consumer demands are now returning with enthusiasm in a market that is still picking up. Consequently, interest rates on both private and commercial properties are seeing a spike. Rising mortgage rates mean tenants will inevitably have to pay more rent, considering current valuations.
Housing Demands Remain Strong
Despite inflation rates rising, housing demands have remained strong this year. At their peak, home prices rose to a whopping 19.5% in 2021. Experts predict that that number could go up another 11% before the end of 2022. The increased cost of buying a new home is causing families to contemplate the next best option, renting one. Trends indicate that vacancy rates are most likely to decrease as tenants scoop up what’s available. Of course, the rental units in the best conditions will be the first to go. So now might be the time to look into upgrading your apartments to boost your ROI.
Rent Prices Continue to Increase
As highlighted in the previous point, housing forecasts predict that home prices will continue to rise. Consequently, tenants can expect their rent to increase, perhaps even faster, as interest rates soar. Although that sounds like bad news for renters, investors are set to put more into development to earn a higher reward. Since labor and material costs have significantly gone up, rent prices will likely continue to increase as supply struggles to catch up.
Wider Renter’s Market
Between the increasing housing demands and supply shortage, the renter’s market for 2022 is inevitably broader. Despite rent prices steadily pushing upwards, more Americans are looking for a place to call home. Although construction is underway in most parts of the country, the supply will still fall short. Thus, more people are inclined to postpone buying their first home in favor of long-term tenancies. In other words, now might be the time to expand your SFU portfolio, which would undoubtedly attract middle-class renters looking for some privacy.
Growing Interest in Southern States
Property owners in the Sunbelt might be happy to hear that the real estate market is performing exceedingly well this year. As of December 2021, the south accounted for 56% of the newly constructed homes in the country. Considering that more employees are now adopting a virtual or hybrid work arrangement, more people are free to seek better housing elsewhere. This trend will continue to accelerate, especially in smaller cities and suburbs. Of the top 10 real estate markets to watch, 8 are in the southern states, including Florida, Texas, and Arizona. Experts guess this exceptional growth is due to their warmer climate, employment opportunities, and relatively lower prices.
Incorporation of New Technologies
With the pandemic forcing everyone inside and the post-Covid era becoming a hybrid workspace, there’s a push for the adoption of new technologies. People want smart devices that’ll make their home life more accessible since they’re now spending so much time at home. Smart thermostats, lights, and hubs are amongst the most popular digital devices entering the rental market. These attractions are a big hit, with tenants looking for greater convenience.
On the other hand, property management applications are also growing among landlords. Following the increased rental arrears in 2020, many property owners are now opting for automated payment options. Other technological solutions include accounting software for tracking incoming funds and outgoing expenses.
Conclusion
That concludes our post on real estate market trends landlords should know. We hope this article has given you some ideas on leveraging the opportunities in 2022. With the low supply and high demand for real estate, this year can be incredibly profitable for landlords. If you’re looking to maximize your portfolio, you should consider consulting an expert. A property manager can help boost the efficiency of your rentals, make your tenants happier, and earn you more money in the long run.
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