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    Real Estate Investing room in Minneapolis

    Your Guide to Real Estate Investing for the Rest of 2022

    The current state of the real estate market in the US is very healthy. Home prices are increasing, many businesses are seeing growth in their customer base, and there is a high demand from buyers and tenants alike. These situations have led to a sellers’ market both for homeowners and many commercial industries.

    As residential real estate can often be looked at as an indicator for other real estate branches, a seller’s market nods toward continued industry strength for the remainder of 2022. In fact, industry watchers expect the annual home value to continue increasing and reach a peak level of around 22 percent in late May. As current housing inventory remains low, home values are also expected to increase in the coming months. With this, it’s firmly assumed that 2022 will follow the 2021 trend of a strong housing market.

    Trends in Real Estate Investing in 2022

    With the housing market continuing to stay strong, investors can look forward to taking advantage of market conditions. Here are a few trends to watch in the real estate market in 2022.

    Cap Rates Will Hold Steady

    Cap rates will remain steady as asset prices increase due to increased demand. The stability will continue as long-term interest rates increase slightly. The first half of the year will see a higher all-property average cap rate than the 10-year Treasury yield.

    Rents will also increase, supporting the net operating income (NOI) of many asset types. Even though real estate rates can influence cap rates, NOI expectations have a more significant short-term impact.

    Alternative Lenders Will Drive the Debt Market

    With many commercial mortgage banks cautious when dealing with the commercial real estate (CRE) market, non-bank lenders have entered the picture. These alternative lenders increased their activities by connecting with borrowers looking for bridge loans. These activities will drive the debt market in 2022.

    Investment Volumes Will See Pre-Pandemic Levels

    Industry experts expect the total investment volume for 2022 to surpass 2021 levels by five to ten percent. The 2022 investment volume is around the same level as 2019, which was a record year.

    Multi-family and industrial assets continue their popularity among investors. But retail and office assets will also attract the attention of investors. Increases in investment volumes will reach 15 percent, depending on the asset.

    It Will Be a Good Year for Capital Markets

    Stable cap rates and liquidity will drive investment activity in 2022. Returns will also increase with the growth of NOI and appreciation of asset values. These positive developments come as economic conditions continue to improve. Even with the potential threat of the virus, industry watchers do not expect it to affect their positive outlook significantly.

    There’s a Positive Outlook for 2022!

    Even with the continuing uncertainty in the market, real estate industry watchers have a positive outlook for 2022. They expect total investment volumes by at least five percent compared to 2021. The economy will also continue to improve and spur investor confidence and improvements in property market fundamentals.

    With the current state of the real estate market in the US being very healthy, it is expected to stay that way for at least another year. The next few years will be suitable for investors as cap rates hold steady and rents continue to rise.

    If you’re looking for help with your commercial real estate investments, consult the experts at Brisky Net Lease.