Look for these real estate trends in the new year

The Roman god Janus is often depicted with two faces: one gazing backward at the past and the other looking forward to the future.  

We all know that 2021 brought the concept of "supply and demand" to the forefront of high housing prices, and low interest rates fueled rising prices. But what can we expect for 2022?

FOX 5 real estate expert John Adams presented his own prognostications on Good Day.

Adams's Predictions

1. The work from home phenomenon will continue to allow many workers the freedom to locate themselves outside of traditional office settings and live in less expensive and remote areas. This trend will fuel growth and rehab in secondary markets, and blunt traditional in-town demand.

2. Home prices, both new and resale, will continue their upward climb during 2022, but at a somewhat slower pace. Depending on who you believe, residential home values were up around 20% during last year, and that rate is simply unsustainable from an economic standpoint. That being said, we still have greater demand than there is a supply of homes, and Adams predicts home prices will climb this year. There will be no decline in home values this year.

3. Long-term fixed-rate home loans will continue to be available to qualified buyers, but interest rates will rise approximately 1% (100 basis points) from today’s rate of about 3.25% to perhaps 4% or slightly higher. Even so, consumers will accept these increases in stride, recognizing that rates are still a bargain.

4. Wall Street investors will continue to pay cash for resale homes in good condition in middle-class markets, especially across the southern US. This trend will, in turn, fuel higher prices, especially for homes that hit all the right notes: 3 or more bedrooms, 2 or more baths, less than 20 years old, move-in condition, priced under $400k. This reflects a belief among investors that many millennials who hope to own will be forced to rent for years to come.

5. For the reasons mentioned above, rental rates will continue to rise in 2022, with monthly costs rising in the double-digit range.  This is a reflection of rising construction costs and a continuation of a shortage of rental availability.  All the new construction enters at the top of the market, where we need it least.  Renters will see an increasing portion of their budget earmarked for housing.

6. Instant Cash Offer Firms will retool and rethink their approach. Zillow finally came to the conclusion that it could not make a profit in the business of instant buying, so they crashed and burned. Adams predicts that promoters will become more conservative and less generous with their offers. The Instant Offer industry won’t go away, but it will evolve in order to remain viable. 

The bottom line is you shouldn't look for major changes in the real estate market in 2022.  The last time Adams checked, there were nearly 330 million people living in the United States, and most of them prefer to live indoors.  

And for most Americans, the best investment they will ever make is in their own home.