Are you thinking of getting into real estate investing in 2022? Or may be you are pondering about if you should get out of real estate investing?
Let’s face it. Real estate has been particularly a “hot” topic over the last 2 years. When COVID exploded at the beginning of 2020, with all the shutdowns and the world going into panic mode, everyone wondered what was going to happen with real estate. Another housing crash like in 2008 may be?
I remember going live on this topic several times at the beginning of 2020 and saying that it will be quite the opposite. When 9/11 happened in 2001, real estate had a record appreciation and momentum over the next 2 years, and I predicted it was going to be the same or even more this time around. And it is and has been.
Real Estate Investing 2022 – 5 Reasons Why You Should
1. Real estate appreciation will continue strong in 2022
In 2021 home prices reached an appreciation of 19.9% (according to Zillow.) While they are not predicting quite a huge jump for 2022, we are still going to see an appreciation of over 10%.
The market appreciation at an above-average rate in 2021 and now in 2022 is due to three main reasons: scarcity, demand and use. There is definitely scarcity of inventory, while demand has been steadily increasing (due to favorable interest rates and millennial entering the buying frenzy.) The use and the advantages of having a steady home or housing has increased, since now homes serve not only as a place to live, but also serve the function of a home-office (remote working) and a home-gym.
2. Rental demand will increase
Rising home values will impact the rental market and price a large share of homebuyers out of the market. Plus lack of inventory will discourage a lot of people from getting into the home buying frenzy.
3. New construction will boom and new developers will enter the market
The National Association of Home Builders has seen a steady increase in new construction and also new developers entering the market. Despite concerns over high materials costs, availability and ongoing production delays, home builder confidence edged higher for the fourth straight month due to strong consumer demand and limited existing inventory.
4. Large funds for real estate and international capital available more than ever
In spite with everything going on in the world due to the COVID crisis, USA has been doing really well with the economy and consumers’ confidence. Investors from other countries want to invest in the US instead of their own country, which grants large availability of funds for real estate projects. REITs and private lenders have definitely seen an increase in demand and allocation of funding.
5. The “Hot Markets” are shifting
In the past, large cities like Los Angeles, New York City and San Francisco, were desirable and expensive. However with the shut downs and restrictions due to COVID, people left those cities because they did not offer the social opportunities and jobs like they used to, and gravitated towards smaller cities and suburban communities, which are less expensive and offer more amenities and open spaces to socialize. According to Realtor.com, the top housing markets positioned for growth in 2022 are Salt Lake City, Utah, Boise City, Idaho and Spokane, Washington.
What does this mean for a real estate investor?
As a real estate investor you are either finding off market distressed properties for landlords and/or rehabbers (wholesale investor) or vacant land for construction for developers, or buying properties for yourself to rent out (long or short term rentals, like AirBnb and BRRRR strategy) and fix and flip.
In any case, by understanding the 5 reasons why real estate investing is a viable business in 2022, based on what I shared above, will give you the edge you need to succeed in this business in the upcoming year.
Also the 3 main keys to be successful as an investor in 2022 are:
- Choosing the right areas based on supply and demand (not too much demand and not enough supply – hint: look for smaller cities and off the beaten path areas;)
- Knowing where the “hot” leads are right now off market;
- Connection and knowing what to say to the leads to get the property owners to work with you.