The national real estate market is a constant state of flux. Staying on top of the latest industry trends is key for successful investors and aspiring home buyers alike. The inherently dynamic nature of the market can make doing so challenging—which is why the experts at Gauntlet Funding have provided the following breakdown of the most pertinent developments in the real estate sector as we transition to the final quarter of 2022.
Inflation remains substantially elevated whilst governmental monetary policy has pivoted significantly in light of recent legislative action. The development from a financial perspective is one of the most significant culprits responsible for the recent changes to the national market. The Fed bumped the short-term interest rates by 50 basis points in May in an effort to curtail inflation, the largest uptick in well over two decades; however, this did not immediately prove fruitful as inflation spiked shortly thereafter before declining slightly over the past few months. Economists anticipate inflation will incrementally decline throughout the remainder of the year but will still be at a level to prompt continued corrective actions from the Fed. The average mortgage rate is presently an entire two percentage points more than they were a year ago which, coupled with increased home prices, has prompted would-be home buyers to turn to the rental market as they are dissuaded by rising monthly installments.
Although a certain segment of aspiring buyers have been prompted to put their home ownership plans on hold, conditions are improving from where they were at the beginning of the year, meaning there is—and will continue to be—rising demand for affordable housing options. With unemployment dropping to 3.5% and salaries increasing 3.8% annually, buyer confidence will only continue to improve. And with the advent of telecommute options in the post-pandemic area, a larger portion of home searchers can circumvent the increase in house prices by relocating to more budget-friendly areas.
There is a widespread need for more construction starts in the majority of key national markets as the housing inventory remains severely depleted. The government appears to have taken notice, with the White House introducing a comprehensive plan to rebalance the housing supply by streamlining the permitting and funding process involved with building smaller, cost-effective homes. Industry experts are projecting the number of housing starts to exceed a 16-year high by the close of 2022—although with materials costs on the rise and supply chain issues still plaguing builders’ ability to operate efficiently, it remains to be seen whether these predictions will hold true. Still, new-construction projects are a viable investment option that have the potential to be a profitable asset in the near future.
Realtor.com has predicted that home sales in the real estate market will drop off by nearly 6.78% by December—which is to be expected as home sales generally cool in the post-summer months. Still as the cooler weather takes over and buyers and sellers alike are afforded the pause to reevaluate their expectations of the market writ large, transactional activity could be on the rise in the near future but will still be significantly below last year’s monumental pace.
Are you ready to get started on your next real estate investment adventure? Partnering up with a lender you can trust is an essential first step in any investment project. Gauntlet Funding has a proven track record of success when it comes to providing flexible and efficient funding solutions to ventures of all shapes and sizes. As a direct private lender, we can get you the money you need when you need it with industry-leading rates—all in a fraction of the time and hassle it takes for conventional mortgage providers. Contact us today to learn more about the Gauntlet Funding advantage.
