How is the US housing market shaping up for 2022?
It’s time to start strategizing investment moves and restructuring portfolios for the 2022 market. So, what key factors are shaping up to be influential and what effects are they likely to have?
The New World Of Work
We are now seeing the largest companies in the country (and world) cave in to allowing employees to work from home indefinitely. Really big companies, like Amazon. Some tried to force people back to the office and it just didn’t stick.
Vaccine mandates for employees have also become a part of the new normal in some states and counties. At least tens, if not hundreds of thousands of key workers are choosing to give up their jobs and lives to avoid the jab. Often high earning healthcare workers, technicians and more. Being in states where they can’t go out to eat with vaccines, and may soon be banned from public transport, expect more interstate migration as they look for jobs in places with no mandates.
Sadly, the chaos of the last couple of years has led to skyrocketing crime rates. Especially robbery. With the chances of you dying by homicide now a leading cause of death in some major cities.
National credit tenants are closing up shop and moving out of these cities due to the lawlessness and losses. That typically only accelerates the domino effect of more crime, fewer jobs, and more outbound migration.
This will set the stage for where there are cheap assets to buy, and where real estate values are rising the most over the next year.
It could also spawn even more demand for other types of real estate, like self-storage too.
Interest Rates & Financing
Interest rates are going to continue to be one of the most pivotal factors in 2022.
Any significant spike in rates is likely to cause shock and fear in markets, and put a cap on some things.
However, ongoing low interest rates will continue to fuel appreciation and spending.
There seems to be little reason to believe there will be a major reversal of recent inflation within the months ahead. In fact, hyperinflation is quite likely to continue. Especially if we have ongoing shortages.
Real estate benefits from inflation. Both in terms of equity and asset prices, as well as cash flow and rents. Even in secondary cities, and C class neighborhoods, 60% rent hikes weren’t uncommon in 2021.
This will also mean more spreading out, and faster sprints in real estate metrics around these hubs.
The expectation is that we will continue to see nonstop proposals for tax hikes and new taxes, as well as the cutting off of long running tax breaks over the next couple of years.
Real estate will benefit from that as it remains one sector that offers a plethora of tax advantages.
As we prepare to roll into the new year, expect a surge in transactions to optimize for tax savings. While another seasonal boost should arrive in tax refund season among renters and lower end home buyers as they become cash rich for a moment.
Many of the trends we’ve experienced over the past two years are likely to continue through 2022. That suggests a strong and rising market for those buying and selling and leasing residential properties, or repositioning commercial ones.