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Real Estate Market Predictions 2022: National Trends To Watch

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You can’t predict the future. But if you pay attention to trends, you can get a good idea of what to expect from the real estate market in the near future and beyond.

Here’s everything you need to know about real estate trends for 2022.

05/2022 update: Our latest South Florida real estate report is out!
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1. Seasonal Slowdown

The real estate market is expected to experience a seasonal slowdown in the fall and winter. Most people tend to buy and move during the spring and summer months when the weather is better, and kids are out of school until next year, leading to the high demand during this time of year. In the fall and winter, home sales tend to slow down as fewer people are willing to move in the middle of the year.

This slowdown takes place nearly every year — and this year is no exception. With that said, don’t expect affordability to increase substantially during this fall and winter slowdown. Instead, expect less competition and perhaps a better chance of a seller accepting your offer.

2. Price Growth Has Peaked

Many real estate agents believe that price growth in this intense real estate boom has reached a record high. But before you get too excited about snagging a great deal on a property, it’s important to understand what this means. Unfortunately, this doesn’t mean that prices are falling. Instead, it just means that they’re not increasing as quickly.

3. But Rents Are Skyrocketing

Home price growth may have peaked, but rental price growth hasn’t reached that point yet — in fact, quite the opposite, according to several figures from a Norada Real Estate Investments housing forecast for 2022. Looking back, rents between August 2020 and August 2021 increased by 11.5%, the first double-digit increase on record. These increases are even higher in certain suburbs — reaching close to 20%.

On a national level, the average rent for a one-bedroom apartment is $1,680, a 21.3% increase year-over-year. The median price for a two-bedroom apartment is $1,958, a 0.4% increase from last month and a 16.7% increase year-over-year. Studios and three-bedroom apartments have seen lower numbers and even decreases year-over-year.

The top five cities that have experienced the most significant increases in two-bedroom rent prices year-over-year:

  • Durham, NC at a 49.2% increase
  • Nashville, TN at a 46.9% increase
  • Austin, TX at a 43.4% increase
  • Tampa, FL at a 41.9% increase
  • Miami, FL at a 41.7% increase

Here are the top five cities that have experienced the biggest decreases in two-bedroom rent prices year-over-year.

  • Columbus, GA at a 20.5% decrease
  • Wichita, KS at a 19.7% decrease
  • Kansas City, MO at a 18.4% decrease
  • New Orleans, LA with a 17.2% decrease
  • Memphis, TN at a 9.1% decrease

4. Supply Remains Low

The supply of properties will remain low into 2022 as more people try to enter the market as the economy recovers from the pandemic-related housing crisis. Supply is at a historic low, with the housing inventory in August decreased by 25.8% over the past year, according to Norada’s report. Unfortunately, there’s no easy fix for this issue, and it will take time for new listings to increase enough to meet the rising demand.

5. Interest Rates May Increase

Interest rates were at historic lows and have helped counteract rising home prices — allowing buyers to afford more expensive homes since they will be paying less interest throughout the loan term. Right now in 2022, the national average interest rate for a 30-year fixed-rate mortgage is 5.48%. The average interest rate for a 15-year fixed-rate mortgage is even lower at 4.73%.

Interest rates have been rising since 2021 and continue to look like that will be a trend. And while this information shouldn’t pressure you to buy as soon as possible, it’s something that you need to keep an eye on if you’re considering a real estate purchase in the near future.

Q1 2022 South Florida real estate trends report Q1 2022 South Florida real  estate trends report Download the report

6. Buyers Are Fatigued

The pandemic-era housing market has been unpredictable. In the beginning, buyers were more than willing to play the game by offering thousands over the asking price, waiving all contingencies, and putting more money down.

However, current homebuyers aren’t as willing to make aggressive yet risky moves. Instead, buyers are now more patient and more willing to wait for the right property and the right deal.

As a result, properties are seeing fewer offers — especially offers over the asking price. Instead of seeing winning offers that are $50,000 over the asking price, many sellers are receiving offers that are less than $10,000 over the asking price.

Instead of buyers willing to waive inspection and appraisal contingencies, they’re refusing to waive these protections and simply moving on if they can’t win a property that way. Overall, this buyer fatigue is contributing to the slowdown of market growth.

7. Builders Ramp Up Production

Many of the real estate supply issues that have driven up prices this year are related to ongoing problems with home building. Builders haven’t been producing enough homes to meet the demand for years, but the issue came to a head during the COVID-19 pandemic when many Millennials entered the market as first-time homebuyers.

Supply chain issues caused by the COVID-19 pandemic have only exacerbated these issues. Quarantine shut down production plants and caused shortages of building materials like plywood and concrete. This has led to a pricing increase of building materials, which have been incorporated into new home prices. These increases have added nearly $18,600 to the average price of a new single-family home.

Many of these supply issues are starting to resolve, and builders are starting to ramp up production. But it will take time for new home construction to be completed and the selling process to commence. It will take even more time for enough new homes to meet homebuyer demand.

8. More Foreclosure Filings

Now that the foreclosure moratorium has ended, expect to see more foreclosure filings throughout 2022. Many homeowners who were unable to pay their mortgages during the pandemic are finally foreclosing on their homes.

It will take time to process all of these foreclosures, but investors should start preparing for these properties to hit the market if they’re looking for a good deal.

9. Mortgage Standards Are Loosening

Information from the Mortgage Bankers Association indicates that mortgage standards are loosening so that it’s easier to secure a mortgage loan. Specifically, there was a 3.9% increase in mortgage credit availability for jumbo and conventional loans between July and August.

Furthermore, the FHFA recently announced rolling back policies that limited federal purchases of investment property loans. As a result, lenders are likely to lower interest rates and fees on these typically high loans.

Additionally, there was a $98k increase of the conforming loan limit in 2022. The new limit is $647,200. This gives buyers access to better rates at higher loan amounts.

10. The Market Won’t “Crash”

So what does all of this mean? There have been talks of a “crash” similar to what the country experienced in 2008 or a housing “bubble” that will pop. But there are no indications that the market is going to crash or pop. Instead, we do see signs that the market will slow down to more realistic and sustainable levels.

If you’re still not convinced, let’s take a quick look at the factors contributing to the 2008 crash. In 2008, lenders were providing mortgages to unqualified borrowers. That has not been the case in recent years. The 2008 Subprime Mortgage crisis told world economic leaders some valuable lessons.

There are stricter controls on property investment, largely influenced by the rampant proprietary trading. With additions like the 2014 Volcker Rule, homeowners are better protected than they were previously.

Even if homeowners struggle to make payments on their mortgages due to the economic recession, they can just as quickly sell their homes for a great price instead of foreclosing.

Final Thoughts on the Real Estate Market in 2022

Based on this information, it’s still a good time to invest in real estate, thanks to low-interest rates and slowing growth rates. To get started on your investment journey, reach out to the financial experts at Vaster for personalized advice and assistance on how to make your real estate dreams a reality.

Fast and reliable financing for real estate investors. Learn More  


Will the Housing Market Cool Off by Fall? Here’s What Experts Predict | Forbes

Compare Today's 30-Year Mortgage Rates | Bankrate

Over 10 Years Later, Lessons From the 2008 Financial Crisis | Investopedia

Atlanta Real Estate Market: Prices | Norada Forecasts 2022

Housing Market Archives - Norada Real Estate Investments

Rent Report, December 2021: The State of the Rental Market | ApartmentGuide

Supply chain shortages stall build times, increase home prices | The Daily Hearth


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