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The Future of Real Estate Investing
By Lawerenc Yun, Chief Economist of National Association of Realtors
U.S. real estate economists are predicting a bright future ahead, with above-average gross domestic product (GDP) growth in 2022 and 2023. The impact on real estate market conditions and values, primarily in housing, vacant land, industrial, and some commercial sectors are expected to outpace past performance in 2022 and 2023.
“There is no end in sight for the long-lived U.S. economic and real estate market expansion, according to leading real estate economists.”
“2022 has been a year of surprises, ”Lawrence Yun, Chief Economist of National Association of Realtors said during NAR’s virtual convention – notably with a robust housing market in the middle of a global pandemic.
“This winter may be one of the best winters for sales activity,” Yun said. “This could be one of the best breakout years just based on the fact that pending contracts are at such a higher level.”
Mortgage applications are also up 20% year-over-year, which reflects the number of buyers in the pipeline approved for mortgages and ready to buy. Home prices are up too: The median existing-home price for all housing types was $311,800 in September – a 14.8% increase from a year ago.
What else does 2022 and beyond hold? Yun thinks the persistent housing shortage will likely keep home prices elevated, while new- and existing-home sales will continue to rise as record low mortgage rates and a work-from-home trend give housing markets a boost. This continued housing shortage will see higher demand for land, pushing land prices higher as homebuilders clamor to acquire land to keep up with the growing demand.
“We are lacking inventory,” he said. “Any foreclosure increases will be quickly absorbed by the market. It will not lead to any price declines.”
Housing shortages will persist. “The challenge going forward is we don’t have enough supply,” Yun said. A balanced housing market is considered to be at a five-to-six-month supply, far from the current market’s under-three-month supply. “There are not enough homes for sale, and that means multiple offers and prices that are rising. Homebuilders are paying premium prices for land as they need to have inventory to build out multiple phases in their current developments.
In addition, Homebuilders will be competing with one another for land parcels, just as home buyers will be competing for the limited housing inventory. Yun sees this trend continuing throughout 2022 and beyond, as the work from home trend continues to be a permanent part of our new landscape.
Future of Las Vegas Real Estate
The Las Vegas real estate market has been making headlines during the coronavirus pandemic. But it’s not for the reasons you might expect. Rather than making headlines for a bursting housing bubble or a full-blown housing market crash (as many predicted would happen this year), everyone has been talking about how hot the Las Vegas real estate market 2022 has been. Demand is high, inventory is low, and home prices are soaring.
According to Realtor.com's Housing Market Recovery Index, the Las Vegas metro area officially crossed the threshold for recovery back in June, after taking a hit from COVID-19 earlier in the year.
Las Vegas Realtors reported that, at the beginning of September, there were less than 4,700 homes for sale on the market. Although that number ticked up by the end of the month to 4,798, the inventory was still down year over year (YoY) by double digits – 34.6%.
Who is buying up Las Vegas homes for sale? Across the US, millennials and first-time homebuyers are entering the market to take advantage of low mortgage rates. While this is true for the Las Vegas real estate market, there is another set of buyers in the city – internal migrants. During COVID-19, Las Vegas has seen a high influx of people coming from more expensive regions like the New York, Hawaii, and California housing markets. Las Vegas has more of a "suburban feel" and is relatively affordable compared to these areas, hence the migration trends.
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