Real Estate To Stay Strong In 2022

What we saw in the real estate market in 2021 was once in a lifetime. Price gains that accelerated quickly, supply issues, motivated buyers, and more, all led to the insane 2021 market. However, because of the past 18 months or so in the market, many people are beginning to predict a crash. This may be because they remember 2008 and do not want to get caught with their pants down again. However, the real estate market experts have came in to explain why this will not be a repeat of 2021. Here is expert views on why real estate will remain strong in 2022.

2022 Real Estate Basics

2022 has a lot of questions to be answered that we will only learn with time. Whether it is higher interest rates, supply constraints maintaining, or other outside events, we have questions and hesitancy. However, 2022 looks to be a really strong real estate market coming off the heels of 2021. While there will not be another market like we saw in 2021, at least we hope not, 2022 will be no slouch. Real estate looks to remain very strong throughout the year, even as rates edge higher and supply remains historically low.

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Real Estate Outperformed the Market In 2021

With the pandemic negatively effecting most industries, real estate is one of the exceptions. In fact, real estate was the best performer, aside from energy, in 2021. The real reason for this effect is that real estate benefits from being a save haven asset, as well as low interest rates. Real estate stocks have been volatile in 2022, however, as rates have had their worst start to the year since 2009. When people see comparisons to 2008 and 2009, they get nervous. However, with risk-off movements in rates because of rate hikes priced in, real estate has gotten beaten up a little bit.

With existing homes sales up in November 2021 at a pace not seen since January 2021, real estate still looks solid. With seasonality basically being non-existent over the past 2 years because of inventory, real estate is still off to strong start. Despite volatility coming from interest rate expectations, real estate still looks to be a top performing asset throughout 2022. Because of some of the most basic economic principles, supply vs. demand and scarcity, real estate prices look to continue to rise.

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Then Vs. Now

The amount of previously-owned homes in November that were sold was up nearly 2% from the month prior. This may not seem like a lot, but with nearly 10% less houses available on market, any increase is exacerbated. With significantly lower inventory than seen in recent memory, it is hard to say when real estate will slow down. Inventory does look to tick up this year, but marginally.

Median home sale prices also increased in November and December, even with adjustments for seasonality. Home prices were boosted and up to $353,900 on average in the U.S. That is nearly a 14% increase from November the year prior (2020). With low inventory and strong demand, real estate prices continue to increase and top even the highest estimates. With buyers continuing to show up in droves, home inventory and price appreciation does not look to take a turn this year. So, for those of you promising that there will be a crash this year, please look at the industry as a whole. Simple economic trends and knowledge of how they work will tell you that a crash is not coming.