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Real Estate Investing Statistics for 2022

Real Estate Investing Statistics for 2022

For the first time in almost two years, Americans are more concerned about the economy than they are about the ongoing pandemic. This is what a poll conducted in December of 2021 showed. And while, strictly speaking, the poll is not a real estate statistic, it does serve to highlight the priorities of the population in 2022.

One way or the other, people’s sentiments will manifest in the real estate markets.

Join us as we breakdown real estate statistics every real estate investors should know before making decisions in 2022.

Noting General Trends

We cover real estate investing nationwide, so the stats that follow will point out general trends in the industry. As you know, local real estate markets are different (what works in Hawaii, doesn’t work in Chicago or Miami, or Connecticut) and there can be pockets where these general statistics don’t apply.

Where possible or relevant, we will try to provide local real estate statistics as well.

Let’s dive in.

The Big Picture

In 2021, the inventory of housing markets was low, the prices were high, and houses were sold almost as soon as they got listed. These are all signs of a sellers market, and we all know that sellers market is not good to real estate investors.

In July of the last year, value appreciation increased more than 19% and this was great only for property owners. House buyers were faced with strong competition and many of them ended up being drawn into bidding wars. As much as 70% of the offers were part of bidding wars.

However, the projections for 2022 state that growth of house prices is likely stabilize to the regular rate (below 3%), which will provide more leverage to real estate investors across all markets.

Some restrictions that were introduced as government’s response to the virus through provisions of the CARES act, like the eviction moratorium, were finally lifted in September. This has already resulted in an increase in eviction fillings by the end of 2021, and it’s expected that the trend will continue, unless state and local governments take action to prevent that.

But there are stats other than eviction stats that are important to renters, so let’s dive deeper.

Rental Property Investment Stats

The rental vacancy rates are at their lowest point since 1985. Some even report that the actual rate of unoccupied rental units has come close to 1%. In other words: there are plenty of renters for investment properties out there, hence the investors’ frustration with the eviction moratorium.

For decades, there has been a shortage of housing supply in the US, and the supply chain disruption of building materials is likely to put builders further behind their intended schedule for 2022. At the same time, renting is more affordable than buying property (across many markets), so it’s a good time to be a landlord with an unoccupied rental unit.

Yet, if you look at the year on year rent change, in some markets, like Delaware and Idaho, rents have gone up more than 10% in one year.

Demographics can contribute to such fluctuations in prices (both rent and buying), and we will take a look at them in the next section.

Migration Patterns

Migration data is a complex set of stats, but it greatly affects real estate markets. After all, these are all people who are prospective renters and homeowners (or rental vacancies and sellers), but their motive for moving can vary significantly. Some of the reasons include: lower standard of living, better weather, employment and career opportunities, political reasons, and lower taxes.

We will try to identify migration patterns through statistics. The increase in population within a state encompasses three factors: natural population growth (ratio between births and death), international immigration, and domestic migration.

In 2021, migrant encounters at the South border hit a 21 year high. The last time we saw a significant influx of migrants was May of 2019 and in 2006 before that.

The large trend in internal migration started before the pandemic. Namely, people are leaving the traditional tech hub of California to move into Texas, and Florida is set to replace New York as the financial center. Florida, for instance, attracts new residents because it doesn’t have an income tax, but the good weather (and political climate) plays a role as well.

Over the last few years, Texas and Florida show a marked population growth (followed by Arizona and the Carolinas) and, consequently, the price of real estate in selected counties within these states has risen more than 30% compared to 2020.

What’s more, it is expected that in 2022, 2 million new jobs will be created within the US. The distribution of these jobs across individual states, as well as improvement of existing employment opportunities, might affect migration patterns. This applies particularly to cities that are hubs for industries which require skilled labor.

However, the crisis taught us that many jobs can be done remotely, too, and people are turning to virtual solutions. Let’s take a look at this aspect of real estate investing.

The Rise of the “Virtual” Within the Industry

The use of virtual services and technologies when buying or selling real estate is on the rise. One can consider this to be a positive outcome of the government’s response to the virus, with all the lockdowns, isolation, and social distancing. Everyone that’s involved in real estate, be it as a buyer, seller, investor, realtor, or other, was forced to find a way to complete a deal virtually.

Let’s take a closer look at specific statistics.

Generally speaking, buyers are more willing to give offers on properties sight unseen, with some outlets reporting that a record breaking sight unseen offers have become the norm.

Virtual staging software is also becoming more and more prominent. Self reported statistics show that virtually staged homes sell above listed price. In the past, good photos and the occasional video was the norm for listing properties, however, these days people expect virtual house tours. And staged houses are sold more easily than vacant homes.

Real estate investors are ready to embrace another “virtual” trend – online signing of contracts. You can even say that these are virtual deals, and one of the guests on our REI Marketing Nerds podcast, Corey Geary, explained how his company has adopted this procedure. We are likely to see real estate investors close more virtual deals in 2022 and beyond.

Will Real Estate Markets Slow Down?

In the first half of 2021, home owners received offers on properties within a week of the property being listed. We all know what that means, house sellers can pick and choose, leaving real estate investors in a tight spot (either empty handed or with empty pockets). The figures on homes that have ended up sold at above listed price went absolutely through the roof.

As we move ahead, in 2022, it is expected that the markets will slow down, however, not by a big margin. Let’s check out a few stats that support this projection.

Mortgage rates hit historical lows in 2021, and this was one of the reasons we saw a quick turnaround across real estate markets. As much as property owners would prefer this trend to continue indefinitely, the economy can’t sustain such conditions because they cause inflation. So, mortgage rates are likely to rise over the long run.

But will this slow home sales in 2022? It depends. If the economy performs, we might only see a drop in mortgage refinancing, while there will still be a plenty of home buyers. As we mentioned above, the housing demand is not satisfied, and even if mortgage rates rise, they might remain low enough for people to buy houses at, more or less, the same volume as in 2021.

Inventory is likely to remain low and behind the actual buyer demand. In plain terms, real estate investors can expect more of the same, although activity will slow down compared to last year.

Closing Thoughts

We have put together these real estate statistics for you at the beginning of 2022. When you look at them as a whole, trends inevitably emerge, however, don’t forget that these trends aren’t set in stone.

Be particularly aware of the point at which statistics become projections and some sort of forecast for the real estate market. Vital indicators can change, in fact, Zillow had to revise their real estate report for 2022 due to housing news that changed their projections.

The whole population (real estate investors included) is fed up with the havoc that came with the pandemic. Even if market conditions don’t change dramatically, you can take the opportunity to make your real estate business more virtual. It’s in times like these when you have to be creative and adapt – you can practice reverse wholesaling to get more deals from a low inventory.

Note the real estate stats but also remember that 2020 and 2021 were both exceptional years, and 2022 is bound to bring at least a slight change for real estate investors.

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