Bash & Co. Sotheby’s International Realty: What to expect now and in the coming months for real estate investing

2022 is right around the corner and in the real estate world we are wondering if we should expect another year of limited supply as well as a shortage of labor. When it comes to real estate investing, accurate market predictions are imperative. This is true for fixer uppers and new developments alike. It begs the question, “Will 2022 be a good year to invest in real estate and what do I need to consider?”

Cooler temps ahead

Experts anticipate home values to cool in 2022 compared to the hot market in the first half of 2021. Investors need to weigh the risk and reward that comes with investing in this changing climate. According to Realtor.com, we saw the rate of price increases fall in both August AND September, which was the first back-to-back monthly decrease in 2021. A positive to this change – this shift may lead to a rebalance between supply and demand in the coming months.

Continuing shift to secondary markets

The pandemic continues to influence the migration of residents out of urban core areas to secondary markets. This presents an excellent opportunity for real estate investors. For reference, a secondary real estate market typically has a population size of between one and five million residents and is located near a primary major metropolitan area. These communities and neighborhoods will surely benefit from revitalization and need to be prepared for the increased demand. Savvy investors and motivated developers can take advantage of these opportunities that are happening in various regions across the country.

The rate of home flipping in 2021 rose, but profit margins were down. File photo.

Dipping profit margins for flippers

Home flippers should pay close attention to the profit margins when making the decision to purchase homes to renovate and resell. The rate of home flipping in 2021 rose, but profit margins were down. ATTOM Data’s second-quarter 2021 U.S. Home Flipping Report found that 79,733 single-family homes and condos in the U.S. were flipped in the second quarter. This equated to 4.9% of all home sales in the second quarter and the first increase in over a year. Although the flipping rate increased, profit margins dipped to the lowest margins in 10 years.

Developers and new construction

Even in this market with all its challenges, there are homeowners who desire new construction. If you are a developer, this market can be equally difficult. Labor shortage can negatively affect project timelines and qualified professionals can be hard to find. Some developers have turned to third party owner representatives to help them navigate these waters. Simply put, these representatives are an extension of the developer and provide valuable input and expertise in all areas of the process while adhering to the project timeline and budget. As a developer, it is important to weigh the pros and cons when establishing this relationship.

Currently, sellers are finding themselves in a more comfortable spot than buyers. Investors will benefit by paying close attention to these trends. There is some chatter about the market settling for buyers due to a rebalance of supply and demand in the coming months. According to Nasdaq.com, real estate investors, home sellers, and even fix-and-flippers should benefit from some boosted returns when it comes time to sell.

Bash & Co. Sotheby’s International Realty is an innovative full-service residential real estate brokerage that leverages the latest technology to serve clients in emerging, established, and luxury neighborhoods across the Kansas City area. Follow them on Instagram here and on Facebook here.