We may be less than a month into the new year, but already certain trends are becoming clear. Here are our bold predictions, expert forecast and general real estate outlook for 2022.
Year Over Year Real Estate Trends
2021 was an incredible year for real estate in the Las Vegas valley. Low supply and high demand created a perfect storm fueled by the new normal’s work-from-home trends, and meant that people wanted more for less.
Traditionally, Las Vegas has provided homeowners with large properties for relatively low prices, which equates to a lower cost of living than other world-class cities.
It no longer became a priority to pay top dollar in order to live downtown in a major market, like LA or New York, with the goal of reducing commute time. When you can work remotely, from anywhere, living near an office building isn’t part of the equation.
It was definitely a seller’s market throughout most of the year. Records were broken, and numerous measurements showed 2021 to have the hottest housing market in U.S. history. By autumn things were beginning to even out, but what does that mean for this year?
Let’s face it, 2021 was a crazy year in more ways than one. We can hardly expect to match that in any sector … nor would we necessarily want to. The pandemic was difficult for so many people in so many ways, and most of us are happy to move on however we can.
So here are our trend predictions for this year:
- The seller’s market will continue but good value is still available for buyers
- The housing market likely won’t reach the astronomical heights of 2021
- 2022 won’t be record-breaking, so 2021 will keep its historic firsts
- Still, the market will stay strong and active throughout the year
- While less extreme, price growth and sales volume is expected to continue
- Low mortgage rates will keep demand high, regardless of price
- Homes will often sell above asking price, with bidding wars expected
- Time on market will be short as buyers are hungry for new inventory
- Vegas homes will remain desirable based on location, weather and cost of living
- Flexible work options will affect homebuying decisions even more than before
Home Value and Sales Growth Compared to 2021
According to Zillow, home value growth is expected to be 11% in 2022, down from almost 20% in 2021, which was among the strongest years they’ve ever tracked.
However, they predict sales of pre-owned homes to reach 6.35 million, as opposed to 6.12 million in 2021. If their predictions come true, we’re looking at the most home sales in one year since 2006.
Prices go down, sales go up … totally makes sense.
Rental Property Demand Will Increase
When houses are selling at higher prices, rental prices increase along with them. Putting a snowball effect into action, this means it’s harder for tenants to save up down payments in hopes of becoming homeowners.
As a result, renters start looking for larger homes to rent, knowing they can’t afford their own house quite yet. That includes single-family homes as well as apartments, since families end up staying in the rental market longer than they historically might.
This is, of course, great news for homeowners and real estate investors who purchase with the intent of making long-term rental income.
Younger Homeowners Will Be Breaking Historic Patterns
Tied in with the increased rental demand is a new pattern never before seen. The new location flexibility made possible by remote work has allowed people to move to larger homes in smaller or otherwise more affordable markets. And yet, they don’t necessarily want to live there full time.
Younger generations are traditionally attracted to living in the city, where amenities are plentiful, but expensive housing makes homeownership little more than a dream. So now, Millennials and Gen Z are buying homes they can afford in these smaller markets. But they’re treating them like vacation homes or investment properties that provide rental income while they live part (or all) of the year in more desirable locations.
In past generations, this type of homeownership would be a second home. But younger home buyers are skipping the purchase of their own primary residence, and going straight to buying a “second home” first.
Chalk it up to these generations being more tech savvy, with better access to research tools. So they can break into the market by buying homes elsewhere, often using virtual tours instead of live walkthroughs. Then they can take advantage of low mortgage rates to build up equity, and even go in on a purchase with family or friends so it’s less of a financial outlay.
The “Sun Belt Surge” Will Continue and Expand
The hottest markets throughout 2021 were in the Sun Belt, which is the southern strip of the country, stretching from the southeast to the southwest. Nevada is part of the Sun Belt, as is California, Arizona, New Mexico, and all the way over to Florida.
In 2021, the Sun Belt city of Austin, Texas, was the country’s hottest market (meaning action rather than temperature, although both might apply). The bottom line is Austin had the biggest home value growth, firmly establishing the Sun Belt Surge. All other top destinations for long-distance moves were also in the Sun Belt.
In 2022, we can expect this trend to extend throughout smaller Sun Belt cities, which become more attractive compared to the high prices in major markets. Being one of the most unique locations in the world — a small city that’s nonetheless a world-famous vacation destination — Las Vegas will no doubt be part of this new fad.
Get Your Own Oasis in the Sun Belt
Las Vegas is the perfect location for those who want to own more for less and work remotely from a year-round “vacation” home with an exceptional quality of living. It’s also perfect for people who want to get in on owning a “second home” first, whether a part-time residence or full-time investment property.
In fact, it’s a fantastic opportunity for Las Vegas homeowners who want to become sellers as well. Whether you want to buy or sell in the Las Vegas area, Dulcie Crawford is your perfect connection.
Dulcie Crawford is a native of Las Vegas with over 23 years of local real estate expertise who understands the city and its trends and opportunities more than anyone. For more information about the current housing market conditions, properties featured on this blog, our Hot Market Listings or to schedule a tour, please contact Dulcie Crawford directly at (702) 505-2775.