More than two years into the pandemic, the US housing market remains white-hot. 2021 saw about 6 million existing homes sold across the country. It was the highest number of homes in 15 years.
The year was particularly good for the Memphis housing market, with the city ranked among the top five fastest-selling markets in the US. By October, homes were selling 16 days faster than the previous year.
So, what will the Memphis area housing market look like in 2022? Here are the top real estate trends home buyers, sellers, and renters can expect this year.
Home Prices to Continue Increasing
Home prices skyrocketed throughout 2021, with the median home price in November reaching $416,900 nationwide. This was a 25% increase over February of the previous year.
In February 2022, there’s no sign that rising prices won’t continue, especially in the Memphis real estate market. With home inventory still low, cutthroat bidding is pushing Memphis home prices higher.
So, what does this Memphis real estate forecast mean? For sellers, it’ll be a fantastic year as they can look forward to making a bigger profit. This applies to just about any type of property, including Mephis turnkey properties.
For home buyers, increasing home prices mean that one will need to prepare well before hitting the market. Line up financing early enough if you hope to submit a competitive bid on the home you like.
Rent Prices on the Rise
Memphis has had a strong rental market for years now. Rent prices have particularly gone up since the onset of the pandemic.
Before the pandemic, rent rates across the Memphis metropolitan area had been going up slowly. For example, rent prices increased by 2% in 2017 before increasing by 5% the following year. In 2019, the rate went up by 4 percent.
After the onset of COVID-19, rent prices in Memphis skyrocketed. Rent prices increased by 19 percent between September 2020 and September 2021. This was 4% higher than the national average.
In the early months of 2022, there’s no sign that rental prices will come down. There’s still a low supply of homes across the region, with investors scooping up the available homes and turning them into rental properties.
If you’re looking to rent space in Memphis, brace yourself for the increasing rates. But for those looking to invest in rental homes, the city offers a great opportunity to generate income from such property.
More People Moving to the Suburbs
The pandemic has fueled the migration of households from the cities to the suburbs across America. Once the country has fully emerged from the pandemic, metro areas may rebound. But for the next three to five years, the trend of moving out of the city to the suburbs is expected to persist, and Memphis will be no exception.
There are two main reasons for this shift. The first is necessity, with Americans who can’t afford to live in major cities forced to leave. Lots of people who’ve lost their jobs and find that they can’t afford to live in the big city are migrating in search of housing options they can afford.
The second is choice. This option is available to Americans who’re financially healthy and prefer living in the suburbs, such as Oakland, Arlington, and Germantown.
Whether you’re migrating out of necessity or by choice, the suburbs have certain advantages that make them highly attractive. For instance, people enjoy lower taxes, cheaper housing, and lower rental rates.
Growing Shortage of Single-Family Housing
The migration to the suburbs has led to the emergence of another trend: the rising demand for single-family housing. With people snatching up the homes currently available, there’s a growing shortage of these homes. It’s no wonder that the prices of these homes have steadily increased throughout Memphis.
The current low mortgage interest rates have played a big role in the rising demand for single-family homes. Due to the quarantine and social distancing measures, as well as telework, more people are looking to buy single-family homes.
There’s also the fact that more millennials are entering the homeownership phase. They’re thus looking for their first home, which increases competition for the few available homes on offer. As a result, housing inventory in Memphis and other metro areas in the US is lower than it has been in decades.
What this means for home buyers is that one needs to get everything ready to have a better chance of landing the home they want. In particular, buyers must organize their financing well and submit attractive bids to fend off the competition.
Mortgage Rates to Remain Low
We’ve already hinted that low mortgage rates have inspired a high demand for homes throughout America. In 2020, mortgage rates hit a 50-year low, with people across the US eager to take advantage. The trend is set to continue for some time, and that’s good news for people interested in getting a mortgage.
This year will see the number of mortgage applications increase as interest rates stay close to zero. Many people are also opting to refinance their mortgages. If you’ve been thinking of doing the same, now’s a good time to make a move.
Stay on Top of Memphis Real Estate Trends
Whether you’re looking to buy your first home in Memphis or your seventh, knowing what to expect can help you prepare well and avoid nasty surprises. The real estate trends we’ve shared in this blog will shape the Memphis area in 2022. Whether you’re a real estate investor, an aspiring homeowner, or a renter, you now know how to better prepare for the market.
Are you in the market for property in the Memphis area? Get in touch with us today and learn how we can help.