10 Predictions for the Future of the Real Estate Market

By Bill Primavera

As a realtor, it is one of my jobs to keep up with current housing trends, but I have never professed to be a prognosticator, knowing what’s coming down the pike. I rely on the wisdom of the experts whose job it is to project trends and we all can react accordingly, whether you’re a buyer or seller.

A recent article in Forbes magazine invited a number of experts to project the coming market, and feeling that it is particularly worthwhile information, I share with you a brief outline of it here.   

As one might suspect, the real estate market was thrown into a tumultuous state when the COVID-19 pandemic struck. Between people losing their jobs and being afraid or unable to move, the year in lockdown made a significant impact on the market.

Even as we return to a greater sense of normalcy, there are several factors that will continue to impact housing prices, buyer behavior and the real estate market in general. I share with you the predictions of the Forbes Real Estate Council as 2021 comes to a close and we venture into 2022.

1. Less urgency to buy residential real estate. There will be less urgency to buy residential real estate as more people go outside their homes and return to other activities. The more robust cities will remain strong, and prices should stabilize for the short term as more inventory emerges. The exodus from metropolitan areas we’ve experienced should subside, while second home markets are likely to experience a softening.
2. The workforce will face homebuying challenges. The affordable housing crisis is facing a perfect storm with the housing shortage and growing barriers to entry with higher credit scores, deposits and income requirements for renters. As a result, our workforce will have more challenges finding a place to live.
3. The market will appreciate significantly. Though “crash” articles may spell gloom and doom, real estate should appreciate at an above-average rate in the coming year for three reasons – scarcity, utility and demand. Scarcity: there is a shortage of 6.8 million housing units. Utility: the home is now the center of the remote workers’ world by being both the office and gym. Demand: Millennials are America’s largest generation, in their prime home-buying years.
4. There will be fewer showings and offers. Sales continued to increase over last year and prices remain stable. There should be fewer showings, fewer offers and less aggressive offers. In most markets, including ours, sellers overcorrected on their pricing months ago, so the inflated asking-price craziness has already settled down a bit.
5. Demand for multifamily homes will increase. Since single-family home supply is constrained and prices are up, the demand for multifamily housing will increase. As a result, multifamily vacancies will go down and rents will increase. We’ve seen this trend since COVID started in early 2020, and this trend has been continuing in full force and will continue in the next 12 to 18 months.
6. Housing prices will become less affordable. Simply put, there is a lack of inventory in the affordable housing space and all the buyers that want to buy can only afford those types of properties. Builders are building houses that the average American cannot afford. Inventory is continuously shrinking and there are more buyers than ever for that product. Housing will continue to rise until it becomes much less affordable for the public.
7. The market is shifting into a more balanced state. Inventory seems to be picking up in our market, and buyers who have been suffering from fatigue have more options and buying leverage than we have seen in the past. There may be a more balanced market in the latter half of the year. For those who are house flippers, it may be wise to give a little cushion on the resale price to accommodate the shift.
8. Use of technology will drive value of assets. It is predicted that developers and owners will increase their interest in using technology to drive the value of their assets. It is going to be about looking for more ways to drive positive financial and climate outcomes.
9. Sublease space will continue to increase. Further softening is expected in the commercial office space market, driven by weakening demand as the shift to a more hybrid workforce continues, highlighting the ongoing transformation in how people work.
10. Rental market will keep growing. We’re becoming more a renter nation, and this trend will keep growing into 2022. Housing prices have become so inflated that the percentage of people who can afford a home has already dropped off and will continue to do so. Much like with the last housing crisis, rental properties will move up to meet the demand for housing needs.

So there you have it.  How do these predictions fit into your housing plans?

Bill Primavera is a realtor associated with William Raveis Real Estate and founder of Primavera Public Relations, Inc., the longest-running public relations agency in Westchester (www.PrimaveraPR.com), specializing in lifestyles, real estate and development. To engage the services of The Home Guru and his team to market your home for sale, call 914-522-2076.

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