The global pandemic and economic downturn in 2021 caused doubts for real estate investors. Property and mortgage rates rose nationwide, and market uncertainty led to a shortage in demand, especially for homebuyers. The property price hike was substantial, only behind the inflation rate of 2008.
If you’re looking to buy or invest in property in 2022, here are some encouraging factors that may well drive real estate investors to chip in the property segment:
Property Rates Expected To Stay Low
Despite the appreciation in home prices in 2021 that saw it reach over 19%, many experts believe that 2022 will foresee a dip in property rates. With the end of the global pandemic and slow resurgence of the economy, home value is expected to drop, which will, in turn, spur surplus demand for residential real estate.
Rental Demand Expected to Increase
The rising cost of construction and materials led homeowners to hike their property rental rates to make up for the vast expenses they incurred. This rise in home rent caused affordability issues and hampered rental trends across the country.
However, experts now suggest that rental property will be back in hot demand, primarily single and multi-family homes. The rise of single-family rentals can be attributed to institutional investors for building single-family home portfolios. Another interesting point to note is the rising acquisitions and emergence of new real estate investment trusts (REIT) that can also boost single-family home shares.
Multi-family homes are keeping up with single-family homes, with a gradual rise of market share in smaller cities. The single and multi-family homes should be an area of prime focus for real estate investors in 2022.
Industrial Real Estate to be a Goldmine for Investors
Industrial and commercial real estate was perhaps the least affected real estate segment in 2021 and is expected to follow a similar trajectory this year. The prices are expected to be lucrative for investors, especially in the logistics sector.
Commercial real estate wasn’t as badly affected due to the hot demand for retail real estate during the pandemic. Virtual and eCommerce shopping skyrocketed during the pandemic, which transformed retail real estate into the highest-grossing real estate segment.
Metropolitan Residential Areas to Be in High Demand
The Coronavirus-induced pandemic led many white-collar professionals to leave metropolitan cities as remote working culture became a transformational trend globally. However, with the pandemic now behind us and the improving economy, employees are starting to reopen their offices. This means that now is the prime time to invest in commercial properties in metropolitan areas where businesses will now operate without the fear of another lockdown.
With the reopening of workspaces and influx of employees, the residential demand around corporate offices is also set to increase.
Additionally, during the pandemic, residential and commercial real estate sellers had to compromise on the price, which led to lucrative buying opportunities for investors willing to take the risk. Interestingly, the prices have not surged to pre-pandemic levels, which means that along with lower interest rates, such properties are worth investing in.
Bonus Season To Foster Higher Investments
The bonus season, which spans from the end of a fiscal year up to a couple of months of the next year, is here. Seasoned investors know the value of reinvesting bonuses within the same calendar year, which helps them to maximize tax savings. Wall Street is already witnessing high bonus rates, making it highly likely that the amount will be capitalized on real estate markets across the country.
Many states are already witnessing higher listings due to the massive bonus turnarounds this season. As the pandemic continues to fade, more sellers will be willing to capitalize on the bonus cycle by inviting home buyers and investors into their property.
Peaking Demand by Chinese Investors
During the Delta surge in mid-2021, Chinese investments in commercial real estate surged over $700 million. This figure is expected to double as 2022 moves forward. As the travel restrictions ease further, Chinese investment will continue to increase.
Industry insiders have quoted that US real estate holds a voluminous demand among Chinese investors owing to the rapid growth in property prices in the US, which guarantees capital gains.
California, along with New York, Michigan, and Georgia, were the top hotbeds for Chinese investments.
Real estate holds an important place in the US economy, with even minor fluctuations or uncertainties impacting the nation’s finances. Industry experts are now increasingly encouraging real estate investment, whether commercial or residential. Investors who are updated with the latest global and local trends should indeed find unique opportunities this year to enhance their real estate portfolio. Investing in the right property can help you to earn higher returns on your investment and increase capital gains.
If you’re looking for property in Temecula, Murrieta, and adjoining areas, Sean Murray Broker can help. I’ve considerable experience in managing and helping individuals to buy/sell their homes with a transparent and smooth process. Get in touch with me to discover the best real estate possibilities for you in Temecula.