Marco Santarelli, Author at Norada Real Estate Investments

NYC Real Estate Market: Prices | Trends | Forecasts 2022

May 17, 2022 by Marco Santarelli

This page has been updated to reflect the latest trends in the NYC real estate market as well as the statewide market. Among metropolitan areas, the New York City metro remains the country’s largest real estate market by value, but by a narrowing margin. The NYC-area housing market is valued at $3.51 trillion, with the Los Angeles metro right behind at $3.27 trillion, according to a report published by Zillow.

New York state's real estate market showed no signs of slowing in March 2022. The buyer demand reached remained strong, owing to pandemic-induced changes in housing needs and preferences. The inventory of available homes remained low, owing to the fact that home seller activity did not increase proportionately to meet this demand, according to the New York State Association of REALTORS®. The median price in the New York housing market has reached $410,000, which is a gain of 13.2 percent from last March.

While new construction activity has remained robust, it has been constrained by a combination of material and labor shortages, rising material costs, and a regulatory and operational environment that makes scaling difficult. The strong seller's market that existed in 2020 persisted and even strengthened in 2021, with inventory levels remaining low and multiple offer situations prevalent across a large portion of the housing market, both locally and nationally. Multiple offers increased prices significantly for the year once again.

New York has also been one of the hardest hit by the COVID-19 pandemic, with the highest job losses among the country's major metropolitan areas. It has been recovering from the economic effects of the pandemic. Inventory shortages and strong buyer demand continued to drive up home prices, with multiple offers on a limited number of homes being a common occurrence in the majority of market segments.

2022 is expected to continue the upward trend seen over the last 18 months, pushing home prices even higher. Given the likelihood that mortgage rates will continue to rise throughout the year, housing affordability will remain a critical factor to monitor. In New York City, home prices remain low in comparison to where they were just before the pandemic hit the city. Buyers can still get a good deal now that prices have risen to mid-2019 levels.

Although rents of apartments have been falling in New York City due to high vacancies we can a significant slow down in those trends. New lease contracts are increasing month after month, and rental prices are recovering as demand rises. The strong buyer demand has also changed the dynamics of the residential sales market, which had been cooling for nearly three years.

NYC is now seeing rising demand and attractive pricing as people want to go back there. According to the latest statistics obtained by Douglas Elliman, for the month of December, Manhattan's net effective median rent reached its highest level, while new lease signings fell at their fastest annual rate. For the fifth consecutive month, listing inventory fell at a record pace and is now below pre-pandemic levels—the largest annual decline in new lease signings for the month of December on record.

Despite the year-end acceleration of the latest COVID variant, the Manhattan market rushed to catch up with the surrounding region and then some. Sales increased to their highest fourth-quarter total in thirty-two years. Listing inventory fell at the fastest annual rate in seven years, with bidding wars capturing the largest market share since early 2018. Luxury median sales prices equaled the prior-year quarter but were significantly above the same period two years ago.

Similarly, Brooklyn's price trends continued their record-breaking streak as sales soared. For the sixth consecutive quarter, the median sales price set a new record. Year over year growth in sales above the $1 million threshold was three times that of sales below that threshold. One in every five-borough sales concluded at a price higher than the initial asking price.

Revision of Key Statistics of New York Real Estate Market in the previous year (NYSAR)

New York home prices were up compared to last year.
The overall median sales price increased 19.4 percent to $370,000 for the year.
Pending sales increased 10.8 percent, finishing 2021 at 157,022.
Closed sales were up 17.2 percent to end the year at 153,110.
Sellers received, on average, 100.7 percent of their original list price at sale, a year-overyear improvement of 2.3 percent.
Comparing 2021 to the prior year, the number of homes available for sale was lower by 30.4 percent.
There were 30,654 active listings at the end of 2021.
New listings decreased by 0.2 percent to finish the year at 192,214.

New York Real Estate Market Trends 2022 (Statewide – Latest)

NYC Real Estate Market — Data by NYSAR. The forecast is an estimate from other sources. While it is deemed reliable, it is not guaranteed.

As the housing supply remains limited, home prices continue to rise in New York. According to the housing report released by the New York State Association of REALTORS®, the median sales price in the Empire State rose once again in March, while the number of homes available for sale has reached critically low levels.

In March 2022, the median sales price increased to $410,000, up from $362,315 in March 2021. This represents an increase of 13.2 percent. Using year-over-year comparisons, the median sales price has risen for the past 23 months in a row. Inventory of homes for sale in New York State decreased by 22.6 percent last month, from 39,707 homes in March 2021 to 30,721 units last month.

The months' supply of inventory decreased by 25 percent between March 2021 and March 2022, from 3.2 months to 2.4 months. A six- to six-and-a-half-month supply is considered a balanced market. The number of new listings decreased by 4.7%, from 17,783 in 2021 to 16,952 in 2022. Additionally, closed sales decreased from 11,412 in March 2021 to 10,350 last month.

However, pending sales increased marginally by 3.1% in March, from 13,507 homes in 2021 to 13,910 units in 2022. The housing affordability index decreased by – 9.2% to 119 as compared to Feb of last year when it was 131. An index of 120 means the median household income is 120% of what is necessary to qualify for the median-priced home under prevailing interest rates. A higher number means greater affordability.

New York Real Estate Market Trends — Source: NYSAR.com

Trends in the New York Housing Market in the First Quarter of 2022

The New York resale housing market (statewide data) continued to expand at a breakneck pace in Q1 2022, with record-high sales prices, low inventory, multiple offers, and strong buyer demand, according to NYSAR data.

Pending Sales in New York State were up 0.3 percent to 33,170.
They are considered is a forward-looking indicator of home sales based on contract signings
Closed Sales decreased 7.1 percent to 30,771.
Inventory shrunk 22.6 percent to 30,724 units.
Prices gazed upward as the Median Sales Price was up 12.7 percent to $400,000.
The average sales price was up 17.4 percent to $525,423.
Sellers received, on average, 100.2 percent of their original list price at sale, a year-over-year improvement of 1.4 percent.
Days on Market decreased 8.8 percent to 62 days.
Months Supply of Inventory was down 25 percent to 2.4 months.
Housing Affordability Index dropped by 11.7% to 121.
A higher number means greater affordability.

New York's Recovery From The Pandemic

The full recovery of the NYC real estate market and the economy as a whole depends on the potential future shutdowns in NYC, as well as the speed and efficiency of vaccine distribution which can help the businesses to reopen with full capacity with no restrictions at all. According to preliminary figures released on April 19, 2022, by the New York State Department of Labor, New York State’s seasonally adjusted unemployment rate decreased from 4.9% in February to 4.6% in March 2022.

New York State's private sector jobs (not seasonally adjusted) increased by 433,400, or 5.9%, over the year in March 2022 (based on a payroll survey of 18,000 New York businesses conducted by the U.S. Department of Labor’s Bureau of Labor Statistics). By comparison, the number of private sector jobs in the U.S. increased by 5.2% over the year.

On a net basis, the total number of nonfarm jobs in the state increased by 28,100 over the month, while private sector jobs rose by 27,500, in March 2022. At the same time, the total number of nonfarm jobs in the nation increased by 431,000, while private-sector jobs increased by 426,000.

New York City’s unemployment rate decreased over the month from 6.9% to 6.5%.
Outside of New York City, the unemployment rate decreased from 3.4% to 3.2%.
The number of unemployed New Yorkers decreased over the month by 27,700, from 459,000 in February to 431,300 in March 2022.

New York Unemployment Rate — Source: New York State Department of Labor

New York City's Real Estate Market Overview (Latest Resale Trends)

Let us now look at the most recent trends in the New York City real estate market. The pandemic has hit New York City hard. As a result of the pandemic's aftermath, people have moved to the suburbs, driving up home prices in those areas. Those who stay in the city, on the other hand, are often able to find a better home for less. The NYC real estate market is currently a buyer's market which means there are roughly more active homes for sale than there are buyers. The supply for housing is outpacing the demand favoring home buyers who are managing to hold good leverage in price negotiations.

Realtor.com's latest data also shows that NYC is a buyer's real estate market as it has a total sales to total listings ratio below 0.12 which tends to favor buyers. In other words, the supply of homes is greater than the demand for homes.

In February 2022, the median list price of homes in New York, NY was $878K, trending up 3.3% year-over-year.
The median listing price per square foot was $936.
The median sale price was $859,000.
The sale-to-List Price Ratio was 100% — homes sold for approximately the asking price on average.
A buyer would prefer a sale to list price ratio closer to 90%, whereas a seller would always prefer scenarios that yield a ratio of 100% or higher.
The median days on market (167) in New York City have increased somewhat over the past month but decreased slightly over the last year.
Tribeca is the most expensive neighborhood, with a median listing price of $3.7M.
Riverdale has a median listing price of $355,000, making it the least expensive neighborhood in New York.

Data by Redfin shows that the median sales price of homes (all types) in New York was $865K last month, up 13.1% since last year.

On average, homes in New York City sell after 70 days on the market compared to 105 days last year.
There were 3,896 homes sold in April this year, up from 3,400 last year.
The median days on the market are 70, down 35% from last year.
The median sales price of homes in Manhattan was $1.4M last month, up 12.5% since last year.
The median sales price of homes in Queens was $650K last month, down 2.3% since last year.

Impact of COVID-19 on The NYC Real Estate Market (New York City)

Migration Trends: People are leaving big, densely populated areas like New York City and spreading out to suburbs or smaller communities with lower infection rates and/or to save money. Over the past several months, there's been an influx of renters in the Hamptons coming from New York City. Hampton is roughly 100 miles from New York City and Brooklyn — the top two cities that experienced the highest amount of net losses.

New York City experienced the highest losses — more than 110,000 residents left the city from February to July of last year. That’s 487% growth (or nearly five times) when compared with the number of outgoing movers that left Manhattan in 2019. Brooklyn ranked sixth last year, but numbers quadrupled in 2020, pushing it to second place. What could be causing the large migrations during the key months of the pandemic? Let's discuss some more interesting trends.

The StreetEasy Market Reports are a monthly overview of the Manhattan, Brooklyn, and Queens sales and rental markets. It’s been two years of unpredictability in the New York City market, but their latest data shows that the seasonality of the NYC home sales market is back. Homes are being sold from the market nearly a month faster than the same time last year.

As the peak shopping season approaches, buyers will likely observe that homes are selling just as quickly, if not more quickly. The spring housing market will be competitive, but the increase in new inventory is encouraging. The recent increase in home prices should encourage even more sellers to place their properties on the market, making it easier and more likely for buyers to find their ideal home.

According to StreetEasy Market Feb 2022 report, after three months of for-sale inventory falling, their data shows there was an increase in available homes between January and February 2022. There was a total of 16,622 NYC homes for sale in February, 549 more than there were in January. Still, inventory was 12.2% lower than it was in February last year, so there remains room for inventory to fully recover.

The number of homes offering price reductions is a good indicator of buyer demand. In February, 8.1% of New York City listings for sale advertised a price reduction. This is the same percentage as February of last year, but less than the 10.2 percent in February of 2020, before the pandemic. In February, the median asking price for a home in New York City remained unchanged from one year prior, at $950,000.

In New York City, the sale-to-list price ratio is falling, indicating that sellers are reducing the difference between their original list price and their final selling price. In January, the median sale-to-list price ratio for Manhattan homes was 98.7 percent, indicating that sellers in the borough came extremely close to receiving their initial asking price.

In February, this percentage dropped to 90.9%. That means a home that was originally listed for $1,000,000 sold for $909,000. Despite the fact that fewer sellers may be advertising price reductions, this data indicates that buyers continue to negotiate and obtain lower prices prior to closing.

NYC Quarterly Home Sales Market Trends

Manhattan asking prices rose 7.7% to $1,395,000 during the first quarter. Inventory fell 10.1% year-over-year with 12,057 homes available on the market but rose by 4% since Q4 2021. This is the first time in three quarters that there has been a quarterly increase in Manhattan sales inventory.
Brooklyn asking prices rose 6.1% to $955,250 during the first quarter. Inventory fell 8.7% year over year with 6,668 homes for sale. Sales inventory remained relatively the same between Q4 2021 and the first quarter of this year, with 22 fewer homes available.
Queens was the only borough analyzed to see a drop in prices and an uptick in inventory. Queens asking prices fell 3.2% to $599,000 during the first quarter, while inventory rose 2.8% year over year with 4,466 homes for sale.

An Overview of NYC Rental Market

In the latest Douglas Elliman report, the price trend indicators in Manhattan rose to record levels by record rates as listing inventory continued to collapse. Net effective median rent and all the face rent price trend indicators rose to their highest levels on record. The vacancy rate fell to its lowest level for the month of February since 2008.

Manhattan is attracting tons of renters. Listing inventory fell year over year by its fastest rate on record. Doorman’s net effective median rent surged year over year for the seventh straight month by a record rate. Non-doorman net effective median rent jumped annually at a record rate for the second straight month for the fifth consecutive month of gains. All luxury price trend indicators reached new records after more than a decade of tracking while luxury listing inventory fell to a record low for the third straight month.

There were 2813 new leases signed, compared to 6561 a year prior — close to a 57.1% decrease.
The average rental price in Manhattan in February 2022 was $4,906, an increase of 29.4% from February 2021 ($3791).
The average rental price increased by 7.4% from January 2022 ($4570).
The median rental price in Manhattan in February 2022 was $3700, an increase of 23.5% from February 2021 ($2995).
The median rental price increased by 4.2% from January 2022 ($3,159).
The current vacancy rate is 1.32%. A year ago it was 11.79%.
Listing inventory (4541) is down by 81.1% from year-ago levels (23,983).
The median rental price increased in Downtown (+29.1%), Northern Manhattan (+6.8%), and Westside (+30.9%).
The median rental price decreased in Eastside (+30.4%).

All price trend indicators in Brooklyn rose annually but fell short of pre-pandemic levels. Net effective median reached the third-highest level for a February in a dozen years. New lease signings rose to the second-highest February since tracking began in 2008 as listing inventory fell year over year by the second-highest rate on record.

There were 1295 new leases signed, compared to 1834 a year prior — close to a 29.4% decrease.
The average rental price in Brooklyn in February 2022 was $3306, a rise of 5.8% from February 2021 ($3,125).
The average rental price increased by 4.6% from January 2022 ($3162).
The median rental price in Brooklyn in February 2022 was $2900, a rise of 10.5% from February 2021 ($2625).
The median rental price increased by 3.6% from January 2022 ($2,800).
Listing inventory (3004) decreased by 85% from year-ago levels (19,965)
It increased by 8.1% from the previous month (2780).

In Northwest Queens, price trend indicators rose annually as listing inventory continued to plunge. Net effective median rent rose to its second-highest level for the month of February as the number of new leases increased to the second-highest on record. Listing inventory fell year over year by the second-highest rate on record.

There were 524 new leases signed, compared to 386 a year prior — a rise of 35.8%.
The average rental price in Northwest Queens in February 2022 was $3074, a rise of 14.1% from February 2021 ($2695).
The average rental price decreased by 2.4% from January 2022 ($3151).
The median rental price in Northwest Queens in February 2022 was $2888, a rise of 14.5% from February 2021 ($2522).
The median rental price rose by 2.1% from January 2022 ($2950).
Listing inventory (517) decreased by 89.3% from year-ago levels (4816) but increased 10.7% from the previous month (467).

NYC Real Estate Market Forecast 2022 (Latest Predictions)

Many industry experts have been predicting a strong property appreciation in New York in 2021. 2021 is going to be a great one for property owners as the state still faces a long recovery ahead. With the relaxation of COVID-19 policies, different economic sectors have opened up in different ways and at varying paces. According to existing trends, the New York housing market will be extremely active throughout the peak home-buying season.

What are the New York City real estate market predictions for 2022? New York City has a track record of being one of the best long-term real estate investments in the U.S. The New York real estate market has been booming year over year. NYC home prices nearly doubled in the 2010s. With supply and demand continuing to favor sellers, prices continue to rise year over year.

According to Curbed by Miller Samuel/Douglas Elliman, the median home sale price for all of New York City in the first quarter of 2010 was $383,699. Prices started rising in 2013 and by the end of 2018, that number had almost doubled to $658,000. 2018 was the sixth consecutive year of home price gains in New York City. The real estate market was already cooling off and the pandemic has further slowed it down after NYC became its epicenter.

According to NeighborhoodScout's data, the cumulative appreciation rate over the ten years has been 72.84%, which ranks in the top 40% nationwide. This equates to an annual average real estate appreciation rate of 5.62%. Despite the pandemic drastically affecting the New York real estate market, during the latest twelve months, New York's appreciation rate has been 14.65%. In the latest quarter, NeighborhoodScout's data show that house appreciation rates in New York were at 5.57%, which equates to an annual appreciation rate of 24.22%.

Let us look at the price trends recorded by Zillow over the past few years. Since the last decade (May 2012), the NYC home values have appreciated by nearly 64% — Zillow Home Value Index. ZHVI is not the median price of homes that are sold in a month within a geographic region.

It is calculated by taking all estimated home values for a given region and month (Also called Zestimates), taking a median of those values, and applying some adjustments to account for seasonality or errors in individual home estimates. It, therefore, represents the whole housing stock and not just the homes that list or sell in a given month.

By this calculation, the current typical home value of homes in NYC is $759,901. It indicates that 50 percent of all housing stock in the area is worth more than $759,901 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). In April 2021, the typical value of homes in NYC was around $705,000. NYC home values have gone up 7.7% over the last twelve months.

Here's Zillow’s housing market forecast for New York, NYC, and New York-Newark-Jersey City Metro. According to their forecast, the supply and demand dynamics will likely push prices north again over the next 12 months. Mortgage rates remaining low, pent-up demand, and good discounts will keep the demand high in 2022. The New York housing market could favor sellers over buyers.

New York-Newark-Jersey City Metro home values have gone up 12.7% (current = $600,354) over the past year and they will continue to rise over the next 12 months.
Home values in New York (statewide) have risen 14.2 percent (current = $393,063) in the last year and will continue to rise in 2021.
Over the last year, home values in New York City have increased by 7.7 percent.
The latest market forecast is not available for NYC.
However, it would probably remain a buyer's market in 2022.

The chart below, created by Zillow, shows the growth of typical home values since 2012 (ZHVI).

NYC Real Estate Market Forecast — Source: Zillow

Please keep in mind that this is a broad market forecast and cannot be guaranteed to be 100 percent accurate. The ongoing pandemic has dramatically altered the dynamics of New York's real estate market, which can vary by neighborhood. According to submarket reports from various local brokerages, New York saw a record number of vacant apartments hit the market, resulting in the lowest rents in more than a decade. Strong buyer demand, on the other hand, has returned to a sales market that had been cooling for nearly three years.

For sellers in New York, it is a great time to sell. Motivated buyers are looking for houses for sale, and you are not competing with as many property owners. Homes are selling as quickly, if not faster than cars during the busiest time of year for consumers. Housing prices are expected to rise, but fresh supply is a positive sign. To make it easier and more possible for buyers to locate their dream house, more sellers are likely to put their properties on the market as a result of the recent price hike.

NYC Real Estate Market: Is It A Good Place For Investment?

Is NYC a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in NYC is a good investment? The fact is that New York house prices are not only among the most expensive in New York, but New York real estate also is some of the most expensive in all of the U.S. Since NYC real estate is very expensive for many investors, there are several other areas where you can invest in real estate and we shall be discussing some of them here.

New York is a fairly walkable city in Queens County with a population of approximately 8,174,290 people. NYC has been one of the hottest real estate markets in the nation for many years. Despite the cooling off, New York City regularly ranks among the most expensive real estate markets in the world. However, that’s due to demand that simply hasn’t let up.

It’s a relatively good time to buy a property in New York as housing inventory is on the rise and competition is less. Currently, the NYC housing market is relatively more friendly to buyers than sellers. With the phased opening of the economy, buyers have been quicker to return to the housing market. It seems they want to cash in on the opportunity to purchase their favorite properties despite high interest rates.

Keeping aside the short-term impact of the ongoing pandemic, let’s take a look at the number of positive things in the NYC real estate market which can help investors who are keen to buy an investment property in this city.

The Impact of International Buyers in New York

Despite all the talk about the one percenter dominating this and that, the truth is that the international elite is bolstering the price of luxury real estate in New York City. They see NYC real estate investment as part of a multi-pronged approach. The property is almost certain to appreciate, so it is an investment. Owning a piece of the NYC housing market gives them a place to stay if they have to flee their home country. The money invested in the NYC housing market is typically not reported to their government, and it is almost guaranteed not to lose value. Ironically, foreign owners like these are much more willing to take a modest loss when they sell when they are no longer interested in the property.

New York City's Expanding Luxury Development

New York’s rent control laws don’t apply to luxury units, and developers have chosen to build these instead of the affordable housing the city needs. However, this development isn’t limited to the densest parts of New York City. For example, Staten Island’s North Shore is seeing new luxury condo construction. Interest in the area is driven by both the improved transit via the new ferry service and luxury buyers seeking relative bargains. This is aside from the oversupply of luxury penthouse units in the NYC housing market.

NYC Rental Market is Strong

The factors that led to the incredibly high rental rates in the NYC real estate market haven’t changed. One is the sheer number of people crammed into such a small space. Another matter to consider is all the zoning regulations that limit housing supply, though New York City has had the sense to give tax breaks to those who turn warehouses and commercial properties into rental units.

This means that non-residential properties can be a viable NYC real estate investment, assuming you can get permission to turn them into lofts, condos, or apartments. Strict eviction laws that make it difficult to remove tenants who are a nuisance, time-consuming to remove if late on rent, and nearly impossible to get rid of it in a rent-controlled unit all force property owners to charge much higher rent in the NYC housing market. It is the classic case of cost-shifting causing others to pay a fortune.

The median rent in New York City now exceeds three thousand dollars a month. One-bedroom apartments and studios rent for roughly three thousand dollars a month, while two-bedroom apartments rent for about 3,800 dollars a month. This is why the NYC real estate market is one of the most expensive in the world.

Current Rental Trends Due to Economic Affects of the Pandemic:

The pandemic reversed a decade of unrestrained rent growth in New York. High unemployment leads to higher vacancy rates, as the New Yorkers could no longer afford to live in the city. It also led to lower demand for the rental inventory piling onto the market as leases expired throughout the summer.

Due to the exodus of Manhattan renters to Brooklyn and the suburbs, there has been a rise in vacancies and falling rents. As demand continues to decrease, rent prices are likely to fall more than they did during the Great Recession. On the other hand, soaring vacancies and rental discounts have attracted a range of renters to neighborhoods that previously would have been unaffordable.

The first signs the city is making a comeback have appeared, with Manhattan and Brooklyn lease signings seeing the highest surge in the past 13 years. The current rental trends (as shown above) that new leases are increasing but since many of the rental market metrics remain very weak, further price declines would likely occur in the coming months.

The Zumper New York City Metro Area Report analyzed active listings last month across 15 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The New York one bedroom median rent was $2,114 last month. New York City was the most expensive market with one-bedrooms priced at $3,420 whereas Newark was the most affordable city with rent at $1,350.

Here are the places where it makes sense to invest in rental properties in the New York City Metro Area. These are the places where the demand for rentals is growing strong in 2022.

The Fastest Growing Cities For Rents in New York City Metro Area (Y/Y%)

New York City had the fastest growing rent, up 37.9% since this time last year.
Poughkeepsie saw rent climb 37.7%, making it rank as second.
Hoboken was third with rent jumping 37%.

The Fastest Growing Cities For Rents in New York City Metro Area (M/M%)

East Orange had the largest monthly rental growth rate, up 5.3%.
Stamford rent grew 5.2% last month, making it the second fastest growing.
Hackensack & West New York were tied for third with rents both climbing 5.1%.

NYC Rental Market Trends — Source: Zumper

The Known Opportunities for Bargain Hunters

The NYC real estate market may seem dominated by five and ten thousand dollars a month apartments in Tribeca, but there are much cheaper neighborhoods. If you’re considering buying NYC real estate investment properties, start looking in neighborhoods like East Brooklyn, High Bridge, and Saint Albans. The average rent for apartments in Saintalbans is roughly 1200 dollars a month, while rents are less than 1500 a month in High Bridge. Since property values are based on multiples of the rental income, this means that you can snap up a small apartment building in the cheapest NYC real estate market for the cost of one luxury condo.

The Overall Cooling of the NYC Housing Market

The NYC housing market can be described as cool, though some will call it a buyer’s market. Things slowed down significantly in 2016 and 2018 as several groups of international buyers found it harder to buy properties or had less need to do so. On top of this is the trend of properties selling below their asking price unless they’re the cheapest unit in the neighborhood. Sales volume has increased somewhat, but there is a wider selection now than several years ago. More importantly, prices are a tenth to a quarter below their 2015 highs.

This is a good time to buy an NYC real estate investment property because the market will continue to warm up as long as the economy remains stable. NeighborhoodScout's data show that during the latest twelve months, New York's appreciation rate, at 5.25%, has been at or slightly above the national average. In the latest quarter, New York's real estate appreciation rate has been 1.04%, which annualizes to a rate of 4.22%.

The Softening New York Luxury Market

The increasing supply of luxury real estate relative to demand is leading to more being done to sell units at their list price. For example, luxury apartment buildings are offering more and more amenities to justify their high monthly rents. Another sign that the market is softening is the growing time on the market for such properties. A few notable properties have sold only after being subdivided into more “affordable” luxury units.

This means that investors with the money could buy a larger unit as a form of NYC real estate investment, subdivide it, and then sell it for a profit. If you have the cash and can close on the property, you could buy these premium properties for up to half of the listing price, too. The alternative is buying slow-moving one and two-bedroom apartments knowing they’ll eventually be worth more.

We mentioned the softening of the NYC housing market already, especially at the higher end. We brought up the increased amenities being used to fill luxury properties that aren’t being held as an NYC real estate investment. However, many properties may sit on the market for years. This is enabled by a large number of properties not lived in year-round and those who simply don’t want to reduce the price tag of their property to a point lower than what they paid for it. As listings pile up and the ongoing carrying costs like high property taxes rack up, expect to see a wave of sellers who will mark down their New York City real estate to move it because they can’t afford to wait to sell it.

The Legislation on the Table Will Increase NYC Rental Rates

There are around a million rent-stabilized apartments in New York City. There are several bills in the Democrat-controlled state senate and a massive tenant’s rights push that will likely lead to tighter restrictions on landlords. For example, it would be harder to get apartments removed from the rent-stabilization policy and limit the ability of landlords to raise rents after existing tenants move out.

While this hurts landlords who own rent-controlled properties, stricter rent control rules result in a reduction in housing supply and rents going up five percent more than they would have otherwise. Conversely, landlords who don’t want to deal with the hassle anymore may be willing to sell properties at a discount simply to get out from under the oppressive regulations.

Disclaimer: Covid-19 may have impacted the NYC real estate market in a way that is not 100% accurately reflected here. When referencing the data published on this page for investment-related decisions, please keep in mind that the data provided here is not solely responsible for depicting the market's current reality.

New York Real Estate Investment: Where to Invest?

New York is dominated by renter-occupied one or two-bedroom apartments. 76.75% of New York's dwellings are rentals. As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom large apartment complexes are the most common housing units in NYC. Other housing types prevalent in NYC include single-family detached homes, duplexes, rowhouses, and homes converted to apartments.

The New York housing market has affordable townhomes. New York's single-family homes account for just 1.15% of the city’s housing units. During the latest twelve months, the New York real estate did cool off. However, the cumulative appreciation rate over the ten years has been 38.81%, which ranks in the top 30% nationwide. Evaluate the specifics of the NYC housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in NYC.

New York City's housing market is one of the most costly and competitive in the country. There are 237 neighborhoods in New York (as per Realtor.com). Tribeca has a median listing price of $3.7M, making it the most expensive neighborhood. Riverdale is the most affordable neighborhood, with a median listing price of $355K. Here are some of New York's most popular neighborhoods, along with their median listing prices, as reported by Realtor.com as of April 2022.

NYC Neighborhoods	Median Listing Price	$/SqFt
Upper East Side	$1.5M	$1.4K
Upper West Side	$1.5M	$1.6K
Riverdale	$355K	$357
Midtown East	$1.1M	$1.3K
Chelsea	$2M	$1.9K
Great Kills	$649K	$428
Harlem	$875K	$1K
Sheepshead Bay	$460K	$452
Flushing	$638.8K	$646
Tribeca	$3.7M	$2K
Park Slope	$1.6M	$1.3K
Eltingville	$625K	$392
West Village	$1.5M	$2.3K
New Springville	$498.9K	$394
Flatbush	$680K	$785
Bedford-Stuyvesant	$899K	$887
Bayside	$749K	$607
Bay Ridge	$535K	$564
Williamsburg	$1.4M	$1.4K
Westerleigh	$650K	$426

There are some buyer-friendly neighborhoods in New York City where buyers have a bit more negotiating power in neighborhoods as compared to sellers. Jackson Heights is one of New York City’s most buyer-friendly neighborhoods at the moment with home prices under $700,000. Other buyer-friendly markets with a median sales price below $700,000 include Rego Park, where the median sales price in Oct 2021 was $389K, trending down -8.9% year-over-year. The sale-to-list price ratio was 100 percent.

The median list price of homes in Sheepshead Bay was $499K in Oct 2021, trending down -5% year-over-year. The sale-to-list price ratio was 97.72 percent. The median list price of homes in East Flatbush was $650K, trending up 8.9% year-over-year. The sale-to-list price ratio was 100 percent. The median list price of homes in Brighton Beach was $569K, trending up 16.4% year-over-year. The sale-to-list price ratio was 97.03 percent.

Buyers have a bit more negotiating power in neighborhoods where the median home price falls between $700,000 and $1 million. In areas like Midtown East, where the median sales price is $872,500. Homes in Midtown East sold for approximately the asking price on average in Oct 2021. The other neighborhoods best for buyers looking to spend between $700,000 and $1 million are Bayside, where the median sales price in Oct 2021 was $720,000 and the sale-to-list price ratio was 99.37 percent; Gravesend ($684,500, 96.98 percent); Flushing ($838,000, 96.38 percent); and Bay Ridge ($499,000, 98.14 percent).

All of this could vary from time to time and can be checked on Realtor.com. Check out some of the best neighborhoods for investing in New York for the long term→ These neighborhoods have been selected from all the five boroughs.

If you think of investing in NYC, you have decided on a long-term investment property. Here are the ten neighborhoods in NYC having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

Broadway / W 225th St
Amsterdam Ave / W 166th St
East Rd / West Rd
W 116th St / Amsterdam Ave
W 57th St / 5th Ave
W 58th St / Ave Of The Americas
W 30th St / 9th Ave
Barclay St / Church St
Broadway / Grand St
Madison Ave / E 60th St

Other Markets For Investing In New York Real Estate

Apart from NYC, you can also invest in Buffalo, NY. Ignore the Big Apple and look to the west if you want to buy rental real estate in New York. The Buffalo real estate investment offers a surprisingly good deal with low prices and relatively high rental rates. The Buffalo real estate market is dominated by older homes. A majority of homes in the Buffalo housing market were built before World War 2.

Interestingly, this also means that many small apartment buildings are designed to serve a population that rented small units close to their jobs. For example, roughly a third of homes are single-family detached homes, while almost half take the form of small apartment buildings. This creates an excellent opportunity for those in the market for Buffalo rental properties. You could buy a small apartment building with multiple tenants for the cost of a single rental property in a more expensive New York real estate market.

Another real estate market in the state of New York is in Syracuse. Syracuse's real estate market offers cheaper property with a higher return on investment and a less hostile legal climate. It is one of the better choices if you want to invest in New York state. Another issue that factors into the equation is the job market. Lots of cities have a great quality of life but almost no one can afford to live there.

The Syracuse housing market ranked 6.3 out of 10 for its job market. That’s better than rural and much of upstate New York. And it is why there is a slow trickle of people moving in to replace those who leave. That’s why the Syracuse real estate market has a net migration of 5 or a stable population. This is in sharp contrast to the depopulation seen in most Rust Belt cities. It also means Syracuse's real estate investment properties will hold their value for the foreseeable future if they don’t appreciate it.

Albany is another real estate market that is good for investment. Albany is a steadily appreciating real estate market. While it isn’t as famous or hot as NYC, it offers an affordable entry point and a massive pool of perpetual renters. Though it may not be somewhere you want to live, many locals are choosing to stay and make their homes here. And that will continue to drive demand for Albany real estate investment properties as long as they are priced right.

You can also consider Rochester. The Rochester real estate market is stable, offering slow appreciation, affordable properties to outsiders, and good returns. It has strong, long-term potential that is only buoyed if NYC collapses. And this is one of the reasons why being everything the Big Apple isn’t is in your favor.

The Rochester real estate market enjoys a healthy population profile. Roughly a quarter of the population consists of children, and many are likely to remain due to the healthy job market. It also means that the Rochester housing market won’t crash if the job market weakens the way San Francisco collapses whenever the tech bubble bursts. Others choose to remain here because of the low cost of living.

Let us know which real estate markets in the United States you consider best for real estate investing!

Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. This article aimed to educate investors who are keen to invest in New York real estate. Purchasing an investment property requires a lot of study, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and taking the help of a real estate investment counselor.

References

Market Data, Reports & Forecasts
https://www.nysar.com/news/market-data/reports
https://www.redfin.com/blog/data-center
https://www.zillow.com/new-york-ny/home-values
https://www.realtor.com/realestateandhomes-search/New-York_NY/overview
https://streeteasy.com/blog/nyc-housing-market-data/
https://www.redfin.com/city/30749/NY/New-York/housing-market
https://www.elliman.com/corporate-resources/market-reports
https://www.propertyshark.com/Real-Estate-Reports/nyc-real-estate-covid19/

Foreclosures
https://www.realtytrac.com/statsandtrends/ny/new-york-county/new-york
https://www.propertyshark.com/Real-Estate-Reports/NYC-Foreclosure-Report

International buyers
https://ny.curbed.com/2019/2/18/18229286/luxury-nyc-condos-real-estate-report
https://www.6sqft.com/why-american-buyers-are-replacing-foreigners-in-the-luxury-market

Softening luxury market
https://www.businessinsider.com/new-york-city-luxury-real-estate-not-selling-penthouse-gimmicks-2019-2

Legislation
https://www.brickunderground.com/blog/2015/01/rent_stabilization_misconceptions
https://www.gsb.stanford.edu/faculty-research/working-papers/effects-rent-control-expansion-tenants-landlords-inequality-evidence
https://www.politico.com/states/new-york/newsletters/politico-new-york-real-estate/2019/04/09/mci-loophole-in-rent-regs-212895

Rules for high rents
https://ny.curbed.com/2019/5/14/18617990/new-york-rent-control-tenants-rights-landlords
https://www.forbes.com/sites/jeffreydorfman/2016/06/16/rent-control-treats-the-symptom-not-the-cause-of-rising-housing-costs
https://www.forbes.com/sites/scott-beyer/2015/04/24/how-ironic-americas-rent-controlled-cities-are-its-least-affordable/#7b7e3e048c62

High rental rates
https://www.trulia.com/research/rent-control-sf-nyc
https://www.rentjungle.com/average-rent-in-new-york-rent-trends

Potential for bargains
https://www.rentjungle.com/average-rent-in-new-york-rent-trends

The Overall Cooling of the Housing Market
https://www.forbes.com/sites/fredpeters/2019/03/12/the-real-estate-market-recovery-and-retreat-in-new-york-city/#3ee366d3100f
https://wolfstreet.com/2019/02/11/liquidity-in-new-york-citys-housing-market-dries-up

Tax law
https://taxfoundation.org/salt-act
https://www.cnbc.com/2019/04/01/manhattan-real-estate-sales-fall-for-sixth-straight-quarter.html

Expanding luxury development
https://www.businessinsider.com/nyc-penthouse-expensive-surplus- divided-up-smaller-units-sales 2019-1
https://object.cato.org/sites/cato.org/files/serials/files/regulation/2018/12/regulation-v41n4-2.pdf

Montgomery Alabama Housing Market: Prices & Trends 2022

May 16, 2022 by Marco Santarelli

How is The Housing Market in Montgomery, Alabama?

Montgomery Alabama Real Estate Market is hot in 2022. It is a good cash-flow market due to the strong demand for rental housing. And this is not entirely due to the 8 or more colleges and universities in the city. The cost of living in Montgomery is lower than the U.S. average while there are a number of good-paying jobs in the area. Montgomery has seen the job market increase by 1.1% over the last year. Future job growth over the next ten years is predicted to be 30.3%. With affordable home prices, lower taxes, and a low cost of living, Montgomery is a great city to live and invest in real estate

The median sales price in the Montgomery area was $215,000 in March 2022, an increase of 10.8% from one year ago and an increase of 5.5% from February, according to the Montgomery Area Association of REALTORS. The median home sale price — is the midway point of all the houses or units sold over a period of time. It offers a more accurate view of what's happening in a market. There is an acute shortage of inventory in the Montgomery area housing market. At the current sales pace, all the active inventory on the market would sell in just 1 month.

According to the quarterly report published by Alabama Center for Real Estate (ACRE), Montgomery residential sales for the first quarter of 2022 totaled 1,359 units, representing a decrease of 1.3% when compared to1,377 units that were sold in the first quarter of 2021. The median sales price in Montgomery for the first quarter of 2022 was $206,292, a 7.8% increase from the first quarter of 2021's median sales price of $191,445.

The average number of days on the market in the first quarter of 2022was 54, representing a decrease of 34.8% from 83 days on market in the first quarter of 2021. The residential units available for sale in the first quarter of 2022 decreased by 29.2% when compared to the same period last year. The quarterly average of inventory for sale divided by the current quarterly sales average equals the # of months of supply, which was 1.1 months, down 30.6%. The market is considered to be in balance at approximately 6 months of housing supply.

Montgomery Alabama Housing Market Trends 2022 (Monthly)

Sales: According to the Montgomery Area Association of REALTORS, March home sales in the area decreased 8.4% year-over-year (Y/Y) from 581 to 532 closed transactions. Following seasonal trends, sales increased 23.7% from February. Sales are now down 1.3% year-to-date.

Pricing: Montgomery Alabama real estate market trends show a 10.8% year-over-year rise in median sales price based on 532 home sales. The median sales price in March was $215,000, an increase of 10.8% from one year ago and an increase of 5.5% from February. The differing sample size (number of residential sales of comparative months) can contribute to statistical volatility, including pricing. ACRE recommends consulting with a local real estate professional to discuss pricing, as it will vary from neighborhood to neighborhood.

Inventory: March listings (526) increased 9.4% from February and declined 18.6% from one year ago. At the current sales pace, all the active inventory on the market would sell in 1.0 months, down from 1.1 months in February and down from 1.1 months in March 2021. Homes sold in March averaged 48 days on the market (DOM), 32 days faster than March 2021.

Forecast: March sales were 31 units, or 5.5%, below the Alabama Center for Real Estate’s (ACRE) monthly forecast. ACRE projected 563 sales for the month, while actual sales were 532 units. ACRE forecasted a total of 1,417 residential sales year-to-date, while there were 1,359 actual sales through March, a difference of 4.1%.

New Construction: The 60 new homes sold represented 11.3% of all residential sales in the area in March. Total sales decreased 27.7% year-over-year. The median sales price in March was $364,091, an increase of 19.5% from one year ago and an increase of 3.2% from February. New homes sold in an average of 63 days, 24 days faster than March 2021.

For all Montgomery-area housing data, click here.

Montgomery Alabama Housing Market Forecast

Some of the lowest real estate appreciation rates in the country over the last ten years have been in Montgomery, where house values have increased just 20.54%, which is an annualized rate of 1.89%. This rate is lower than the appreciation rate found in 90% of the cities and towns in America. Over the last year, Montgomery's appreciation rates have trailed the rest of the nation.

In the last twelve months, Montgomery's appreciation rate has been 14.33%, which is lower than appreciation rates in most communities in America. In the latest quarter, NeighborhoodScout's data show that house appreciation rates in Montgomery were at 7.52%, which equates to an annual appreciation rate of 33.63%.

According to Zillow.com, the typical home value in Montgomery County is $138,826. Montgomery County home values have gone up 20.7% over the past year and 34.78% over the past decade (since May 2012). Similarly, the typical value of homes in the Montgomery MetroMontgomery Metrohousing market is $178,769, up 17.4% over the past year and 46.5% over the past decade. The Montgomery, Alabama Metropolitan Statistical Area (commonly known as the Tri-Counties or the River Region) is a metropolitan area in central Alabama.

The current housing demand: According to Realtor.com, the median listing home price in Montgomery County, AL was $169.9K April 2022, flat year-over-year. The median listing home price per square foot was $97. Montgomery County has affordable townhomes and affordable condos. There are 6 cities in Montgomery County where Realtor.com has active listings. Cecil has a median listing home price of $495K, making it the most expensive city. Montgomery is the most affordable city, with a median listing home price of $160K.

Montgomery Alabama Housing Market Forecast — Source: Zillow

Montgomery Real Estate Investment Overview

The Montgomery Alabama real estate stands out for its affordable properties, relatively high rents, and numerous opportunities for deals. The relative breadth of its student housing market is remarkable given its small size. Here are some of the reasons to consider investing in Montgomery real estate.

A Big Student Market

Student housing offers stable income and better than average returns. Students care as much or more about safety, walking distance to school, and amenities than they do price. This is why cap rates for properties within half a mile of campus are so low; they rarely come on the market, and when they do, there is a bidding war. Investment opportunities do exist in older student housing that can be renovated and now rented out at a premium.

You’ll see steady turnover as people graduate, replaced by incoming freshmen. These tenants will never buy a home until after graduation, and if they have trouble paying the rent, getting a roommate is an acceptable solution. This makes the Montgomery Alabama real estate market perfect for those who want to invest in student housing since there are simply more universities in the area.

Montgomery Real Estate is Affordable

Montgomery real estate is cheap. The typical home value in the Montgomery area is $178,769 whereas, in the city, it is $129,700 (Zillow Home Value Index). ZHVI is a smoothed, seasonally adjusted measure of the typical home value and market changes across a given region and housing type. It reflects the typical value for homes in the 35th to 65th percentile range.

While that is far lower than the national average, it is considerably cheaper. That said, affordability should continue to be the driving force of both supply and demand in the area. First-time buyers and Millennials should find the Montgomery home market more enticing than most others. Hence, Montgomery real estate investing should experience a boost in activity as well.

A Large Rental Market for Multi-Family Housing

While the cost of living and housing are both relatively low in Montgomery, many residents can’t earn enough to afford to buy a home. This created a relatively strong market for multi-family housing. As of May 17, 2022, the average rent for a 1-bedroom apartment in Montgomery, AL is currently $675. This is a 12% decrease compared to the previous year.

The average rent for a 2-bedroom apartment in Montgomery, AL is currently $900, a 16% increase compared to the previous year.
The average rent for a 3-bedroom apartment in Montgomery, AL is currently $1,095, an 8% increase compared to the previous year.
The average rent for a 4-bedroom apartment in Montgomery, AL is currently $1,395, a 16% increase compared to the previous year.

Montgomery Alabama real estate is more than apartments for locals and students. The 2017 Realtors Confidence Index Report described the outlook for single-family homes in Alabama as “very strong”. Buyer traffic for Alabama was seen as strong. For seller traffic, Alabama was rated in that report as having moderate seller conditions, but all of the surrounding states were projected to be “weak” in that category.

Suburbs with Potential

Prattville is located near Montgomery, Alabama. Capitol Hill Golf Course is located here; that’s the site of the Nationwide Tour. The town’s population has grown by half in the past ten years. This is an excellent place to consider buying a rental home whether you’re catering to snowbirds or people relocating to the area before finding a permanent residence. The typical home here is worth around $240K, a deal compared to other up-and-coming golf communities.

Suburbs around Montgomery offer safety, space, and more modern amenities. Small towns around the city provide wide open spaces and privacy. That’s why homes in Wetumpka have a median price of around $160,000 while rent for apartments there as of mid-2018 was $1200 per month, 20% more than the state average. This is where you can find luxury homes and apartments to buy as investment properties while still paying a fraction of the cost of one in a bigger market.

Tax Friendly State

Alabama has incredibly low taxes. The state and local tax burden typically rank among the top ten (best) in the U.S. The state and local taxes are one of the biggest deciding factors real estate investors need to consider. Alabama has some of the lowest property tax rates in the nation. The median property tax in Montgomery County, Alabama is $435 per year for a home worth the median value of $121,000. Montgomery County collects, on average, 0.36% of a property's assessed fair market value as property tax.

Montgomery County has one of the lowest median property tax rates in the country, with only two thousand five hundred thirty-eight of the 3143 counties collecting a lower property tax than Montgomery County. The average yearly property tax paid by Montgomery County residents amounts to about 0.74% of their yearly income. Montgomery County is ranked 2719th of the 3143 counties for property taxes as a percentage of median income.

The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified.

References

Market data and trends
https://www.zillow.com/montgomery-al/home-values/
https://acre.culverhouse.ua.edu/category/statewide/montgomery-area/
https://acre.culverhouse.ua.edu/research/residential-research/montgomery/
https://www.neighborhoodscout.com/al/montgomery/real-estate
https://www.realtor.com/realestateandhomes-search/Montgomery-County_AL/overview

Job Growth
https://www.bestplaces.net/economy/city/alabama/montgomery

Alabama taxes
https://taxfoundation.org/state/alabama/
http://www.tax-rates.org/alabama/montgomery_county_property_tax

Prattville data
https://www.nerdwallet.com/blog/mortgages/home-search/best-towns-alabama-young-families/

Montgomery growth
https://www.bestplaces.net/city/alabama/montgomery

Student housing market
http://www.nreionline.com/student-housing/buyers-return-student-housing-sector

Housing Market Predictions 2022 to 2025: Crash or Boom?

May 15, 2022 by Marco Santarelli

Housing Market Predictions 2022 to 2025

What are the housing market predictions for 2022, 2023, and so on? This appears to be a frequently asked question. Everybody is talking about housing, but how is the market doing? Is the housing market ascending or is it on the decline? If you're wondering how the housing market will fare over the next twelve months, especially if you're an investor, there's some good news for you.

In light of what real estate professionals are forecasting, these are some educated predictions about what the future of the United States housing market will look like. Despite these early signs of a slowing market, it remains as hot as ever for homebuyers, with new records set for home-selling speeds and price increases.

Prices are rising due to a mismatch between supply and demand, but this is not a housing bubble. Many experts predicted that the pandemic would cause a housing crash on par with the Great Depression. That, however, is not going to happen. The market is in far better shape today than it was a decade ago. The housing industry has had a boom last year, with the largest annual gain in single-family house values and rentals, historically low foreclosure rates, and the highest number of home sales in 15 years.

Over the past decade, chronic underbuilding and the influx of millions of millennials into the homebuying market have resulted in a major mismatch in housing supply and demand. Despite the fact that mortgage rates are skyrocketing, housing prices are not expected to slow down any time soon. The most likely effect is a slower rate of appreciation.

The April 2022 housing statistics release from Realtor.com® demonstrates that housing demand has continued to moderate, despite rising property prices and mortgage rates. In April, the median list price of a home reached an all-time high, while the number of pending listings (those in the process of being sold) decreased.

Additionally, sellers have returned, and the number of newly listed homes has finally increased compared to the same period last year. In the following weeks, inventory is also expected to increase relative to last year, so buyers who are able to remain in the market this year may encounter less competition and more options.

Here's what experts predict will happen in the housing market in the coming months and years. The sharp rise in mortgage rates is driving away more homebuyers, but it also appears to be discouraging some homeowners from selling. With both demand and supply falling, the market is unlikely to shift from a seller's to a buyer's market anytime soon.

Rising mortgage rates may take some of the steam out of the market, allowing inventory to rise slightly. It would also slow the rate of home price appreciation and reduce the possibility of a red-hot housing market resulting in an overheated market. The supply of available homes is so low that even a significant drop in demand due to higher interest rates will not turn this into a buyer's real estate market, according to industry experts.

Because there are not enough houses available to meet demand, home prices will continue to rise, but the combination of rising home prices and elevated mortgage rates means fewer people will be able to afford to buy. There would still be continuous price appreciation, scarcity of inventory, and good demand. Some markets will experience lower appreciation rates than others, with the Sunbelt performing particularly well.

Home prices do not appear to be decreasing, even in some of the country's most expensive markets, the tier one markets. For example, according to CoreLogic, these large cities continued to experience price increases in February, with Phoenix on top at 30.4% year over year. The second rank was held by Las Vegas with 26.5% year-over-year price growth followed by San Diego (25.2%).

Home Price Growth in Top 10 Metros — Source: U.S. Home Price Insights – CoreLogic®

Will The Housing Market Crash in 2022 | 2023 | 2025?

The overarching question is that will the housing market crash? The simple answer is that it will not crash in 2022, 2023, or 2025. Rising rates aren’t cooling the market as some expected. The current trends and the forecast for the next 12 to 24 months clearly show that most likely the housing market is expected to stay robust, with many of the trends that propelled real estate to new heights last year remaining firmly in place this year as well.

In recent years, the price of homes has climbed dramatically. Many prospective buyers, especially those with limited financial resources, are eager to hear whether and when home prices will become more accessible.

Here Is When Housing Market Prices Are Going to Crash. While this may appear to be an oversimplification, this is how markets operate.

When demand is satisfied, prices fall. In many housing markets, there is an extreme demand for properties at the moment, and there simply aren't enough homes to sell to prospective buyers. Home construction has been increasing in recent years, but they are so far behind to catch up. Thus, to see significant declines in home prices, we would need to see significant declines in buyer demand.

Demand declines primarily as a result of rising interest rates or a slowing economy in general. Ultimately, for rising interest rates to destroy home values, we'd need substantially less demand and far more housing supply than we presently have. Even if price growth moderates this year, it is extremely improbable that home prices will crash.

Thus, there will be no crash in home prices in 2022; rather, there will be a pullback, which is normal for any asset class. The home price growth in the United States is forecasted to just “moderate” or slow down in 2022 or 2023.

Ultimately, for rising interest rates to destroy home values, we'd need substantially less demand and far more housing supply than we presently have. Even if price growth moderates this year, it is extremely improbable that home prices will crash.

Mortgage rates are expected to increase somewhat but stay historically low, home sales will reach a 16-year high, and price and rent growth will drop significantly compared to 2021. Affordability will be a concern for many, as home prices will continue to rise, if at a slower pace than the previous year.

With 10 years having now passed since the Great Recession, the U.S. has been on the longest period of continued economic expansion on record. The housing market has been along for much of the ride and continues to benefit greatly from the overall health of the economy. However, hot economies eventually cool and with that, hot housing markets move more towards balance. Housing market forecasts are essentially informed guesses based on existing patterns.

While the real estate pace of last year appears to be reverting to seasonality as we approach 2022, demand is not waning. Increasing interest rates will almost certainly have a greater impact on the national housing market in the early months of 2022 than any other factor. While sellers remain in an advantageous position, price stability and the continuation of competitive interest rates may provide some much-needed relief to buyers this year. Housing supply is and will likely remain a challenge for some time as labor and material shortages, as well as general supply chain issues, delay new construction.

The latest housing market trends show that prices are rising in most parts of the country and most price segments because of the lack of supply. Economic activities are ramping up in all sectors, mortgage rates are rising, and jobs are also recovering. The housing market remains largely a seller's market due to demand still outpacing supply. The inventory of available houses continues to be a constraint on both buyers and sellers.

Forecasting home price appreciation is a challenging task. While inventory has increased slightly, it remains significantly below pre-pandemic levels and is simply unable to meet current demand. Tight supply following years of underbuilding, combined with increased demand due to remote work, and US demographics — will continue to be a factor in 2022 & 2023. It will continue to be a seller's real estate market in 2022. Expect to see bidding wars on several houses, especially as the spring and summer shopping seasons approach.

Let's look at what experts forecast regarding the US housing market through at least 2023, and you'll get a better idea of what to expect. Most of them say that prices aren’t likely to drop in the near future.

The housing market is coming off a year in which home prices in the United States increased by an unsustainable 18.8%. Will the market continue to grow at this rate or will it be a little less frenetic this year? The housing market is even tighter now than it was prior to the spring 2021 housing frenzy. Even industry titans like Zillow increased their bullishness in January, increasing their projected home price growth rate for 2022 up to 16.4 percent.

However, they subsequently determined that even this rate was too conservative. The home listing site now predicts that the year-over-year rate of home price growth will hit 22% in May — an acceleration of home price growth. It would then gradually slow through February 2023 by the end of which the typical U.S. home is expected to be worth almost $400,000. This robust long-term outlook is driven by their expectations for tight market conditions to persist, with demand for housing exceeding the supply of available homes.

According to another study by Zillow, the total value of private residential real estate in the United States increased by a record $6.9 trillion in 2021, to $43.4 trillion. Since the lows of the post-recession market and the corresponding building slump, the value of housing in the United States has more than doubled. The most expensive third of homes account for more than 60% of the total market value. The market value hit the $40 trillion mark in June of last year and since has been gaining an average of more than half a trillion dollars per month.

One of the most widely held housing market predictions for 2022 is that inventory will remain scarce but price appreciation will be slower than it was this year. While spring and summer will likely see an increase in listings, it is unlikely that there will be enough to meet demand. The housing market has been particularly robust in 2021, with high demand for homes in almost every area of the nation. The same trend will follow in 2022.

The shortage of inventory has created a red-hot housing market, with homes selling within hours of being listed, frequently for well over the asking price. According to many housing experts, buyers can predict similar trends this year to those seen over the last two years: increased prices, low inventory, and quick turnaround.

However, some significant hurdles are approaching the US housing market. Most experts had predicted mortgage rates for housing to rise this year. The cost of borrowing money through mortgages has been steadily increasing this year. Most experts predicted that mortgage rates would climb this year, but they did so more quickly than expected, averaging more than 4% for 30-year fixed-rate mortgages in mid-February. Around mid-April, it surged to 5.28 percent, the highest level since April 2010, and the uptick continues.

Monthly affordability will suffer as interest rates rise, but we'll also lose more of the investment-type buyers looking for once-in-a-lifetime leverage. As a result, rising interest rates may also imply a more stable market. With rates that low in 2021, all kinds of buyers rushed in, and with little housing supply to match, price rise has been ferocious.

This also emphasizes affordability. The basics of housing needs would still continue to drive primary purchases forward. It's a good thing that the housing market will be less heated in 2022 and 2023. Let's take a closer look at why the housing market is showing some signs of a slowdown in 2022 & beyond.

Fannie Mae predicts that a double-digit home price rise will continue until the middle of 2022. Still, it won't be until 2023 that home value appreciation recovers to the pre-pandemic rate of 5%. Based on this, prospective investors may be pessimistic about the 2023 market. While prices are not expected to fall, Fannie Mae anticipates that price growth will be slower than usual in 2023. A slowing in the home price appreciation and possibly increased inventory could help avoid a real estate market disaster in 2023.

As of April 2022, government-sponsored enterprise anticipates a slowing housing market over their projected horizon. Mortgage rates have hiked up considerably in recent months, and such large moves have typically resulted in a housing slowdown. As a result, they forecast a slowdown in home sales, house prices, and mortgage volume during the next two years. They anticipate that the house price rise will slow to a pace more in line with income growth and interest rates.

Many potential purchasers, particularly millennials, have been priced out of the market as home prices have grown at an exponential rate. Purchase mortgage origination volumes are expected to grow to $2.1 trillion in 2023, $27 billion higher than the previous forecast. The refinance originations are expected to be around $1.1 trillion in 2023, as the impact of stronger home prices and higher interest rates are projected to offset each other.

This has been beneficial to house flippers, but that may alter the 2023 housing market. Mark Zandi, the chief economist of Moody's Analytics, said he is concerned about a harsh landing in the housing market, but he believes the market and economy will not collapse as they did last time. He believes that for the 2023 housing market, home prices will level off, decreasing in certain sections of the country while rising somewhat in others. In comparison to the rise in 2022, this prediction for 2023 appears fairly reasonable.

According to Zillow, the current typical value of homes in the United States is $337,560. This value is seasonally adjusted and only includes the middle price tier of homes. In March 2021, the typical value of homes was $279,000. Home values have gone up 20.6% over the past year and Zillow predicts they will rise 17.8% over the next twelve months, i.e; by the end of February 2023.

Zillow's housing market forecast for 2022 has improved. The real estate listing site now claims that its previous forecast was too pessimistic.

The forecasts for seasonally adjusted home prices and pending sales are more optimistic than previous forecasts because sales and prices have stayed strong through the summer months amid increasingly short inventory and high demand.

Back in December, the company predicted that the 12-month rate of home price growth would decelerate to 11% by the end of the year. Then in January 2022, Zillow revised that figure — saying that we would finish 2022 up 16.4%. As of March, it forecasts that home price rise will peak at 22 percent in May before gradually slowing thereon.

Simply put, Zillow anticipates that the 2022 spring housing market will heat up even more. The main downside risk to its prediction is rising inflation, which increases the likelihood of near-term monetary policy tightening, increasing mortgage rates, and weighing on housing demand.

Their bullish long-term outlook is based on their expectation that tight market conditions will persist, with housing demand exceeding supply.
Zillow expects annual home value growth to continue to accelerate through the spring, peaking at 22% in May before gradually slowing to 17.8% by February 2023.
Monthly home value growth is also expected to continue accelerating in the coming months, rising to 1.8% in March and growing to 2% in both APRIL & MAY before slowing somewhat.
By the end of February 2023, the typical U.S. home is expected to be worth more than $400,000.
Existing sales volume (SAAR) is expected to remain the same in March as in February, before climbing slightly to around 6.4 million, where it is forecast to remain through the remainder of the year.
Overall, Zillow expects 6.416 million existing homes to sell in 2022, up 4.8% from an already strong 2021.
Existing sales volume (SAAR) is expected to grow throughout the spring home shopping season, before falling very slightly beginning in July.

Housing Market Forecast 2022 & 2023 — Source: Zillow

The robust long-term outlook is driven by the expectations for tight market conditions to persist, with demand for housing exceeding the supply of available homes. While Zillow's housing market forecast is bullish, it is also a bit of an outlier when compared to CoreLogic's forecast. The CoreLogic HPI Forecast shows that higher mortgage rates erode buyer affordability and should dampen demand in the coming months, leading to the moderation in price growth in their forecast.

Their national year-over-year appreciation will slow to 5% by February 2023, as rising interest rates are expected to sideline even more buyers. U.S. home price growth registered a year-over-year increase of 20% in February, another series high and marking 12 months of consecutive double-digit gains. The CoreLogic HPI Forecast indicates that home prices will increase on a year-over-year basis by 5% from February 2022 to February 2023.

house price forecast — Source: CoreLogic [February 2022 to February 2023]

On the other hand, Fannie Mae's housing market prediction is less bullish than Zillow's. According to their recent housing market forecast, home price growth will remain strong but decelerate. They predict the effects of worsening affordability to lead to a drag on home price growth.

They still expect strong appreciation for this year as inventories currently remain very tight and measures of buyer traffic remain robust. Fannie Mae's expectation of 7.6 percent growth in 2022 is still considerably higher than the average pace of 5.4 from 2012 to 2019. However, this represents a large deceleration from 2021’s expected record house price growth of 17.3 percent.

Housing Price Forecast 2022 — Source: Fannie Mae's Economic & Housing Outlook

The FMHPI is an indicator for typical house price inflation in the United States. It shows that home prices increased by 11.3 percent in 2020 and 15.9 percent in 2021, as a result of robust housing demand and record low mortgage rates. According to Freddie Mac's recent housing forecast, house value growth in 2022 will be less than half of what we've witnessed last year.

Given the anticipated rise in mortgage rates, Freddie Mac anticipates some cooling in housing demand, forecasting house price growth to slow from 15.9 percent in 2021 to 6.2 percent in 2022 and then to 2.5 percent in 2023. Home sales were strong in 2021, with fourth-quarter home sales expected to come in at 7.1 million. They forecast home sales to hit 6.9 million in 2022 and increase to 7.0 million in 2023.

The increase in house price growth will be less transitory than the increase in consumer prices, as the U.S. housing market will continue to struggle with a shortage of available housing for many months to come. Strong house price growth is expected to lift home purchase mortgage originations from $1.9 trillion in 2021 to $2.1 trillion in 2022.

With a higher mortgage rate forecast for 2022 and 2023, they anticipate refinancing activity to soften, with refinancing originations declining from $2.7 trillion in 2021 to $1.2 trillion in 2022 and $930 billion in 2023. Overall, the company forecasts total originations to decline from the high of $4.7 trillion in 2021 to $3.3 trillion in 2022 to $3.1 trillion in 2023.

Housing Market Predictions — Source: Freddie Mac

Housing Market Forecast 2022: Will Prices or Sales Decline?

The prices are not going to decline in 2022. The various forecasts from experts show that 2022 will remain a sellers' housing market, and home values are expected to increase by double-digit percentage points. If mortgage rates continue to rise, although, at a slower rate than in recent months, demand will likely decrease in the fall and winter, while home prices will continue to grow, albeit at a slower rate.

The real estate market has emerged as a boon for sellers and a source of worry for buyers in the middle of this epidemic. Home prices have been increasing in the mid-single digits for many years. Recent double-digit price rises reflect the convergence of exceptional demand and chronically low supply.

Prices are increasing as a result of enough money on the sidelines and very low mortgage rates. The improving economy and the approaching peak homebuying years of millennials are driving a residential housing boom. The housing supply is now at its lowest level since the 1970s, due to millennial homeownership and other factors such as rising building prices and real estate speculators snapping up starter homes.

In March 2022, 28 percent of total sales were made in cash, the highest level since July 2014. This indicates that nearly one-third of purchases are conducted with cash, indicating that there is a sizeable group of buyers who are not sensitive to interest rates. This also indicates that higher interest rates will have less of an influence on the housing market than one might expect. Detached single-family houses continue to be in great demand.

These properties provide greater living space and separation from adjacent houses than attached properties provide. Despite rising interest rates, the median home price for new residential homes in March 2022 was greater than in March 2021, according to data from the Census Bureau and HUD. The median price of a new home in March increased by 21.4% year-over-year to $436,700.

Almost every home sold last month was priced at or above $200,000. A strong home price increase is anticipated to continue through the remainder of this year and into 2023. This also implies that despite rising interest rates, individuals are still willing to pay top money for homes. But with a near record-low inventory of previously owned homes, economists believe higher borrowing costs will have a moderate impact on the new housing market.

There were 407,000 new homes on the market, up from 392,000 units in February. Houses under construction made up 65.5% of the inventory, with homes yet to be built accounting for about 25.8%. At March's sales pace it would take 6.4 months to clear the supply of new houses on the market, up from 5.6 months in February.

In the long run, an infusion of newly-built homes could benefit the housing market. But there won't likely be a surge in new inventories this year or even next year. Builders cannot develop new homes quickly enough to meet up with customer demand. Over a decade of underbuilding in the new home sector has increased pent-up demand, despite builders' best efforts to increase inventory.

According to the most recent housing market forecast (by realtor.com), home price growth will slow further in 2022 but will continue to rise. As housing costs continue to consume a greater portion of home purchasers' paychecks, buyers will become more inventive. Many will take advantage of continued workplace flexibility to relocate to the suburbs, where many can still find homes at a lower price per square foot than in nearby cities. Prices will remain high, inventory will remain scarce, and mortgage rates will climb.

Home sales prices are expected to continue rising, resulting in a decade-long string of year-over-year gains beginning in early 2022.
Looking ahead, Realtor.com anticipates that with economic growth projected to sustain enthusiastic purchasers' spending power, the median home sales price will continue to rise, gaining 2.9 percent in 2022, a somewhat slower rate.
Homebuyers will face increased monthly costs as a result of rising prices and borrowing rates.
Affordability constraints will prevent prices from increasing at the same rate as they did in 2021, even as supply-demand factors continue to drive prices upward nationwide.
The housing market will remain competitive for buyers in 2022, particularly those looking for homes in entry-level price tiers.
Numerous protective buyers (millennials) imply rising property prices, which, when paired with rising mortgage rates, would result in greater monthly payments for buyers.
At a national level, they expect to see continued home sales growth in 2022 of 6.6% which will mean 16-year highs for sales nationwide and in many metro areas.
With almost 45 million millennials between the ages of 26 and 35 who are prime first-time homebuyers in 2022, housing demand is likely to continue strong.
2022 is expected to have the 2nd highest sales level in the last 15 years, bested only by 2021.
First-time homebuyers will need to be successful in the 2022 housing market if we are going to see the homeownership rate begin to climb again.

The listing price, also known as the asking price, is the amount a seller has marketed a property for, whereas the sale price is the amount it ultimately sells for. In March, the national median listing price for active listings was $405,000, up 13.5% compared to last year. The median existing-home sales price rose to $375,300, up 15% from one year ago. The median sales price of homes increased 15.0 percent to $357,300, marking the 120th consecutive month of year-over-year gains, marking 121 consecutive months of year-over-year increases, the longest-running streak on record.

Much of the growth was fueled by a 21.2 percent increase in property prices in the South. All other regions experienced home price growth of between 5% and 11%.

The median existing single-family home price was $382,000 in March, up 15.2% from March 2021.
The median existing condo price was $322,000, an annual increase of 11.9% over 2021.
The median price in the Northeast was $390,200, up 6.8% from one year ago.
The median price in the Midwest was $271,000, a 10.4% climb from March 2021.
The median price in the South was $339,000, a 21.2% jump from one year prior.
For the sixth straight month, the South experienced the highest pace of price appreciation compared to the other regions.
The median price in the West was $519,900, up 5.4% from February 2021.

Will Mortgage Rates Rise Continue to Rise in 2022?

Housing prices have risen in the first quarter of 2022 despite rising mortgage rates, indicating a mismatch. Mortgage rates will eventually slow down home prices. Economists predicted rates to rise by the end of 2022, but the recent surge in rates has many analysts wondering what would happen next. It happened faster than many predicted, with rates on 30-year fixed loans breaking through 5 percent in April to the highest level in more than a decade.

As mortgage rates rise, competition among those who can afford to buy should continue fierce for the time being. Also, as rates have risen beyond 5%, the refinancing boom of 2020 and 2021 also appears to be finished. According to Black Knight data, rate-and-term refinance activity continued to fall in March, while cash-out refinances remained unchanged.

The economic recovery, particularly inflation, has been very evident in the late epidemic phases, and we now face a backdrop of mortgage rates rising at the quickest rate in decades. More than two-thirds of mortgage experts surveyed by Bankrate believe rates will continue to rise since inflation is not slowing down quickly.

The Fed is likely to raise interest rates several times this year, and its policy has a direct impact on the interest rates on various mortgage products, specifically adjustable-rate mortgages and home equity loans. Fed policy has fewer repercussions for fixed mortgage rates, which track 10-year Treasury yields more closely. Borrowers will see an end to the historically low rates that typified the period following the 2008 and 2009 global financial crises.

As of May 13, 2022, the national average 30-year fixed-mortgage rate is 5.57 percent, up 15 basis points over the last week. A month ago, the average rate on a 30-year fixed mortgage was lower, at 5.07 percent. The average rate for a 15-year fixed mortgage is 4.81 percent, up 9 basis points from a week ago. Almost a year ago, the benchmark 30-year fixed-rate mortgage was at 3.21 percent.

At the current average rate, you’ll pay a combined $569.04 per month in principal and interest for every $100k you borrow.
That’s an extra $7.51 compared with last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $525 per $100k borrowed.
Monthly payments on a 5/1 ARM at 3.85 percent would cost about $468 for each $100,000 borrowed over the initial five years
But it could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.

With inflation blazing and the U.S. economy chugging along, the average 30-year mortgage rate rose to 5.28 percent this week, up from 5.12 percent the previous week, according to Bankrate's nationwide poll of large lenders, the highest level since April 2010. The 12-year peak in mortgage rates comes as the Federal Reserve moved to raise interest rates, the central bank’s first increase since 2018. One of the primary challenges that investors and buyers will need to address this year is rising interest rates.

Today's rates are much higher than they have been in years, which is likely to have a few knock-on consequences in the US housing market – though they are unlikely to produce significant declines in housing prices. While quickly rising mortgage rates may dampen the strong housing demand somewhat, do not anticipate a halt to home price appreciation. A slower rate of appreciation is more likely.

Keep in mind that, despite recent increases, mortgage interest rates are still within reach when seen in historical context (back in 1981, rates topped 18 percent for a 30-year fixed-rate mortgage). If the house you're eyeing is a good fit for your family and won't put you in financial peril, go ahead and buy it. The longer you delay, the more money you'll have to spend on rising rentals and saving for the down payment you'll need to buy a house. It all depends on your financial status and the housing market in the area where you live.

Rising mortgage rates still have the potential to drive a sizable portion of buyers away from the housing market. This year has already seen a significant increase in housing prices. When combined with interest rate increases, it may become too much for many homebuyers. As a result, the first half of the year is likely to see continued high house prices. When inventory increases and mortgage rates rise, the housing market may soften in the second half of 2022 and in 2023.

Even with rising mortgage rates and higher prices, the housing market would remain a seller's market due to low supply and increasing demand as more millennials are projected to buy houses in 2022. Now millennials make up the largest share of homebuyers in the US, according to a 2020 survey from the NAR. According to a new study by Realtor.com, buying is more cost-efficient than renting in a growing number of the largest cities in the country.

This is encouraging news for the millions of millennials who are approaching peak homebuying age. Millennials are the largest generation in history, and they are already in their mid-thirties, approaching their prime home-buying years. They were delayed in purchasing a home, but are now back in full force. Thus, we have two, four, or five years of millennial homeownership.

According to the National Association of Realtors, existing-home sales fell 2.7 percent in March to a seasonally adjusted annualized rate of 5.77 million units. February's reading was also revised downward, from 6.02 million to 5.93 million units, a bigger decline than typical. March sales were down 4.5 percent from the same month in 2021.

The reading is based on closings, which indicates that the contracts were likely signed in January and February when mortgage rates began to rise but had not yet risen as dramatically as they did in March. According to Mortgage News Daily, the average rate on a 30-year fixed mortgage was 3.29 percent in early January and increased to 3.9 percent by the end of February. The 30-year fixed-rate has increased to 5.35 percent from 5.35 percent previously.

Sales of homes between $100,000 and $250,000 were down 21% year over year, while sales of properties between $750,000 and $1 million increased 30%. Homes priced over $1 million witnessed a 25% increase in sales. Homes for sale are selling swiftly, with an average of 17 days on the market, down from 18 days a year earlier. Cash sales accounted for 28% of total sales in March, the highest percentage since July 2014. Distressed sales – foreclosures and short sales – represented less than 1% of sales in March, equal to the percentage seen in both February 2022 and March 2021.

There were 950,000 properties for sale at the end of March, a decline of 9.5 percent year over year. At the current rate of sales, this amounts to a two-month supply. The supply of available properties is greatest at the low end of the market, skewing sales toward the higher end. Few sales are occurring in the low end because of the lack of inventory. Therefore, more supply is needed at the lower end of the market to boost sales.

First-time buyers were responsible for 30% of sales in March, up from 29% in February and down from 32% in March 2021. Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in March, down from 19% in February but up from 15% in March 2021.

Single-family home sales decreased to a seasonally adjusted annual rate of 5.13 million in March, down 2.7% from 5.27 million in February and down 3.8% from one year ago. Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 640,000 units in March, down 3.0% from 660,000 in February and down 9.9% from one year ago.

The South accounted for over half of all the sales in March, accounting for 45 percent, followed by the Midwest at 22 percent and the West at 21 percent, with the Northeast accounting for only 12 percent. The highest sales were seen in the price segment of $250,000 to $500,000. This price range accounted for 43% of total home sales seen in March. The price segment in the $100,000 to $250,000 range accounted for 21% of total home sales.

References

Latest Housing Market Data & Statistics
https://www.realtor.com/research/
https://www.realtor.com/research/blog/
http://www.freddiemac.com/research/forecast/20220121-quarterly-economic-forecast/
https://www.realtor.com/research/2022-national-housing-forecast/
https://www.nar.realtor/research-and-statistics/housing-statistics/
https://www.realtor.com/research/top-housing-markets-2022/
https://www.zillow.com/research/home-values-sales-forecast-jan-2022-30667/
https://www.zillow.com/research/daily-market-pulse-26666/
https://www.zillow.com/research/zillow-2022-hottest-markets-tampa-30413/
https://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index.aspx
https://www.corelogic.com/intelligence/u-s-home-price-insights/
https://www.realtor.com/research/2021-national-housing-forecast/
http://www.freddiemac.com/research/forecast/20210715_quarterly_economic_forecast.page
https://www.nar.realtor/research-and-statistics/housing-statistics/housing-affordability-index
https://www.investopedia.com/personal-finance/how-millennials-are-changing-housing-market

Phoenix Real Estate Housing Market: Prices | Trends | Forecast 2022

May 15, 2022 by Marco Santarelli

Phoenix has been one of the hottest real estate markets in the U.S. The Greater Phoenix housing market is extremely strong this year. It is a metropolitan area, centered in the city of Phoenix, which includes much of the central part of Arizona. The Phoenix real estate market has not only recovered after a slump due to COVID-19 but the demand has reached new heights. The Case-Shiller house price index, which measures repeat sales, was up 32.9% over the year in Phoenix in February, well above the national average increase of 19.8%.

The housing shortage is just dire in Phoenix Area. A healthy housing market, experts say, is one in which there are enough homes for sale that if no new ones came on the market, it would take four to six months for the supply to run out. Phoenix has had enough for less than one month. Last year, Phoenix led the way with a 32.5% year-over-year price increase, according to the S&P CoreLogic Case-Shiller Indices released on Feb. 22.

A similar trend continues in 2022. According to CoreLogic HPI, the large cities continued to experience price increases in March, with Phoenix leading the way at 30.4% year over year. Among large metro areas, three recorded monthly price gains of 20% or higher in March: Phoenix (30.4%), Las Vegas (27.4%), San Diego (25.8%), and Denver (21.9%).

According to Zillow's home value index, typical property values in Phoenix-Mesa-Scottsdale Metro grew by 30.9% from April 2021 to April 2022, compared to 21% from April 2020 to April 2021, and 8.48% from April 2019 to April 2020. Phoenix-area home prices are forecasted to continue to rise at a brisk pace over the next twelve months. The supply of active listings stands at an all-time low. It would take about a month for the current inventory of homes on the Phoenix housing market to sell given the current sales pace.

According to Zillow, among the nation’s largest markets, annual appreciation was the second-fastest in August 2021 in Phoenix (31.8%). Only Austin, Texas, with 44.8 percent, beats Phoenix. The annual rental growth in Phoenix was 24.8%. Year over year, the Greater Phoenix's for-sale inventory is down 12 percent, according to Zillow's statistics. More inventory is anticipated to become available in the coming months.

A panel of Zillow's economists and real estate experts expect that Phoenix will be among the nation's top 10 hottest markets in 2022, where home values are expected to appreciate at a faster rate than the rest of the nation. Phoenix ranks at #8 while Tampa ranks #1 on that list. Zillow economists anticipate that national home values will climb by 14.3 percent in 2022, slower than the record-breaking rate of 2021 but still a market where the number of buyers exceeds the number of homes for sale. Each of the top 10 hottest metros is predicted to exceed that growth.

According to the Arizona Regional Multiple Listing Service, Phoenix home prices continued to rise as a result of extremely low supply and above-average demand, with the median sales price up 28.0 percent year over year and the average sales price is up +21.2%. The median sales price in the Phoenix region was $460,000 in March 2022. The average sales price was $569,752. Looking ahead to April, the ARMLS Pending Price Index is projecting a median sales price of $469,500. If April’s median sales price projection is correct, we will see a year-over-year gain of 25.2%.

ARMLS projects the median sales price to rise to $469,500 for April 2022, and the average price is estimated to reach $598,400. Months supply of inventory for March was 0.89, down from last month when it was at 1.14 months. It refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly.

After more than 19 months of extreme seller market conditions, the Greater Phoenix area will remain the seller's market in 2022. In seller markets, prices do not decline, but listings may remain active for a few additional days before accepting a contract. A full-price offer may be sufficient to secure a home. Purchasers may feel less compelled to waive appraisal and repair costs.

According to Redfin, the Phoenix housing market is very competitive.

In April 2022, Phoenix home prices were up 27.7% compared to last year, selling for a median price of $461K.
On average, homes in Phoenix sell after 21 days on the market compared to 23 days last year.
There were 2,286 homes sold in April this year, down from 2,538 last year.
More than fifty percent (61.5%) of homes were sold above their original asking prices, which is 4.3% more than last year.
About 22.5% of the listed homes were sold with price drops.
The sale-to-list-price ratio was 102.6%.
The average homes sell for about 2% above the list price and go under contract in around 22 days.
Hot listings can sell for about 6% above the list price and go pending in around just 6 days.

Phoenix is the seat of Maricopa County and the largest city in the state. In April 2022, the median list price of homes in Maricopa County was $515K, trending up 25.6% year-over-year (source: Realtor.com). The median listing price per square foot was $285. The median sale price was $495,000. It is a seller's market with a Sale-to-List Price Ratio of 101.19%. There's more demand for homes than there is supply, and it's what we see in most housing markets today.

Paradise Valley has a median listing price of $4M, making it the most expensive city in Maricopa County.
Sun City is the most affordable city, with a median listing price of $325,000.
Phoenix city has a median listing price of $475K, trending up 26.7% year-over-year.
The median home sold price in Phoenix is $461,000.
Arcadia has a median listing price of $1.7M, making it the most expensive neighborhood in Phoenix.
Central City South is the most affordable neighborhood in Phoenix, with a median listing price of $324.5K.

The pandemic (in 2020) could only pause sales, which in turn created a huge pent-up demand. As we saw Arizona real estate market thriving & becoming sizzling hot in the past couple of years, even the rise in mortgage rates was believed not to affect it. Low-interest rates are helping boost but the inventory is sparse. High demand and low inventory have increased prices, which is a piece of good news if you plan on selling. As per the current trends, the Phoenix is all set to remain a seller's market in the next 12 months. The prediction is that the upward price trend will continue for the near and medium-term, making any price reductions in 2022 rather unlikely.

Arizona Housing Market Trends 2022

If you are considering moving to Arizona, Scottsdale, Phoenix, and Tucson are some of the top places to call home. According to Zillow Home Value Index (ZHVI), since the last decade (May 2012), Arizona housing prices have gone up nearly 203%. ZHVI is not the median price of homes that are sold in a month within a geographic region. It is calculated by taking all estimated home values for a given region and month (Also called Zestimates), taking a median of those values, and applying some adjustments to account for seasonality or errors in individual home estimates. It, therefore, represents the whole housing stock and not just the homes that list or sell in a given month.

By this calculation, the current typical home value of homes in Arizona is $436,441. It indicates that 50 percent of all housing stock in the area is worth more than $436,441 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). In April 2021, the typical value of homes in Arizona was around $335,000.

Arizona home values have gone up 30% over the past year and most likely they will continue to rise at a similar rate (double-digit appreciation) over the next twelve months. This also raises a bit of a concern that in Arizona wages are not keeping up with the rising costs of housing. When prices go up, some buyers can no longer afford to buy and drop out. The faster that pricing goes up, the more buyers tend to drop out, at least in a healthy market.

Arizona Housing Market — Source: Zillow.com

Arizona's housing market has over 900,000 renter households, accounting for 36% of the total number of households. According to a report from the National Low Income Housing Coalition (NLIHC), the rental prices in Arizona have become out of reach for many residents. For too many low-income workers, wages have not kept pace with rising rents and home prices. Workers need to make $21.10 an hour to afford a 2-bedroom rental at a fair-market rate.

In Arizona, the Fair Market Rent (FMR) for a two-bedroom apartment is $1,097. To afford this level of rent and utilities — without paying more than 30% of income on housing — a household must earn $3,658 monthly or $43,892 annually. Assuming a 40-hour workweek, 52 weeks per year, this level of income translates into an hourly Housing Wage of $21.10.

The minimum wage in Arizona is $12.00/hr and the Average Renter Wage is $17.46. Cost-burdened is defined as spending more than 30% of one’s monthly income on housing and utilities. Neighborhoods in west and South Phoenix are most cost-burdened. In some cases, more than 50% of households are paying 30% or more of their income on housing costs, while less than 29% of renting households are housing cost-burdened in the north.

Flagstaff MSA is the most expensive MSA where you need an hourly wage of $24.35 to afford a 2-bedroom rental. The second most expensive is MSA is Phoenix-Mesa-Scottsdale, where you need an hourly wage of $22.56 to afford a 2-bedroom rental.

Arizona Housing Affordability — Source: The National Low Income Housing Coalition

Between 2010 and 2018, the City of Phoenix’s median income increased by only 10%, while, median rent increased by over 28%, and the median home price increased by over 57% during this time. In 2018, half of Phoenix renters were considered housing-cost burdened, 25% of homeowners were housing-cost burdened and altogether 36% of the entire population is housing-cost burdened. According to a report by Phoenix.gov, 65 % of households that fall within or below the moderate-income range would require some amount of subsidy to achieve housing that is considered affordable at their income level.

Here's the average cost of a home in Arizona across all the counties (source: Realtor.com)

Arizona Counties	Median Listing Price	$/SqFt
Maricopa County	$515K	$285
Pima County	$369K	$215
Yavapai County	$575K	$308
Pinal County	$415K	$220
Mohave County	$385K	$231
Coconino County	$699K	$377
Navajo County	$425K	$265
Gila County	$455K	$293
Yuma County	$299K	$190
Cochise County	$266K	$158

Phoenix Housing Market Forecast 2022 – 2023

What could be the Phoenix real estate market predictions for 2022 to 2023? Phoenix is the 5th largest city in the country and continues to grow. New residents are drawn to Phoenix by its strong economy, relatively low cost of living, high quality of life, economic opportunity, and cultural attractions. Since 2000, Phoenix’s population has grown by 20% to include approximately 555,013 households and 1.6 million people.

It is the biggest city in Arizona and the state’s capital. It is a minimally walkable city in Maricopa County with a population of approximately 1,442,530 people. However, Phoenix itself is massive. It is the only state capital with more than a million people. It is the fifth-largest city in the country. The Phoenix housing market is much larger than Phoenix itself – it encompasses the entire Valley of the Sun, Phoenix’s sprawling suburbs that are home to another five million people. That makes the Phoenix metro area the twelfth largest in the country.

The favorable living conditions have, furthermore, comforted real estate investors and buyers to invest in Arizona real estate market. The Phoenix housing market was a headline in the news a decade ago when the housing crisis of 2007 and 2008 caused home values here to fall by as much as half. The slow recovery of the national housing market has taken a decade.

Since 2006, the population has grown faster than housing. This growth fueled by job growth has finally consumed the glut of re-sale housing created during the bubble years. Now the market is facing a shortage of homes for sale. Phoenix home prices were up by roughly 7% over the last twelve months. Despite the increase in property prices, the Phoenix real estate market remains much more affordable than other places.

Single-family homes continue to drive the Arizona real estate market. In 2019, single-family homes grew by roughly 4% as compared to 2018. Particularly, previously-owned single-family houses compromise the majority of residential sales in the Arizona real estate market- approximately 80% of all sales. Annually, the number of previously-owned single-family homes is three to four times greater than new single-family home sales.

The Phoenix real estate market is the top-performing, not only in the Arizona real estate market but nationwide as well. Phoenix has a mixture of owner-occupied and renter-occupied housing units for sale. According to Neigborhoodscout.com, a national real estate data provider, three and four-bedroom single-family detached are the most common housing units in Phoenix. Other types of housing that are prevalent in Phoenix include large apartment complexes, duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 60% of Phoenix's housing units.

Since the last 10 years (May 2012), housing prices in the Phoenix metro have appreciated by nearly 223.7% (ZILLOW HOME VALUE INDEX). Phoenix's housing market started so strong in 2021 that only something as drastic as the ongoing pandemic could have impeded the real estate sector. The year 2021 started with an extreme shortage of houses for sale, and an increasing number of sales over the asking price of property owners.

The current typical home value of homes in the Phoenix-Mesa-Scottsdale Metro is $466,170. It indicates that 50 percent of all housing stock in the area is worth more than $466,170 and 50 percent is worth less (adjusting for seasonal fluctuations and only includes the middle price tier of homes). In April 2021, the typical value of homes in Phoenix was around $356,000. Home values have gone up 30.9% over the past year alone. Phoenix is a sizzling hot seller’s real estate market and prices will continue to rise in the next twelve months.

Similar growth has been recorded by NeighborhoodScout.com as their data also shows that in the past ten years, Phoenix real estate appreciated by 273.66%. This amounts to an annual real estate appreciation of nearly 14.09%, which puts Phoenix in the top 10% nationally for real estate appreciation.

During the latest twelve months, Phoenix's appreciation rate has been 33.00%, which is higher than appreciation rates in 98.95% of the cities and towns in the nation. In the latest quarter, the appreciation rate has been 11.85%, which annualizes to a rate of 56.50%. This figure also corroborates Zillow's positive forecast of +20%. It tells us that home prices in this region are expected to continue their growth in 2022 in double-digits. First-time home buyers will remain a strong force while younger Gen-Z buyers are expected to play a growing role in this housing market.

Here is the latest housing forecast for Phoenix, Metro Phoneix, and Maricopa County. There's good profit potential for the period of one year if you are looking for homes for sale with good flipping profit. It can be a profitable property investment opportunity if you can find a good deal. A long-term investment in Phoenix real estate will yield even greater profits.

Phoenix-Mesa-Scottsdale Metro home values have gone up 30.9% over the past year and they will continue to rise at a similar pace in the next twelve months.
In the city of Phoenix, home values have gone up 29.6% (current value = $425,130) over the past year and will continue to rise in the next twelve months.
Maricopa County home values have gone up 30.4% (current value = $475,651) over the past year and will continue to rise in the next twelve months.
Mesa home values have gone up 28.4% (current value = $432,246) over the past year and will continue to rise in the next twelve months.
Scottsdale home values have gone up 31.2% (current value = $849,169) over the past year and will continue to rise in the next twelve months.

Phoenix Housing Market Forecast — Source: Zillow.com

These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? It is quite evident that the ongoing pandemic has not had any major impact on Phoenix's housing market. However, it was quite expected that social distancing, higher unemployment, and lower overall economic activity would constrain real estate activity in the near term. And it did happen from May 2020 onwards. The shutdown resulted in 546,900 unemployment filings.

At the same time, the industry started adapting to the current environment by conducting business using technologies such as virtual showings and e-signing to help buyers and sellers with their housing needs in the face of these challenges. COVID-19’s impact on the Phoenix housing market was not that extreme. The Metro Phoenix housing market is extremely strong and has been hitting several new records in the last few months.

What does it mean for homebuyers in Phoenix? The biggest mistake buyers make is sitting around waiting for sale prices to decline while their potential mortgage payment plummets. Mortgage rates have been on an upward journey in 2022. The average rate on a 30-year fixed-rate mortgage was 4.98% in April 2022, which is more than April 2021 (3.06%). This is the time for buyers to take advantage before they are increased again. Properties purchased today are expected to be strongly appreciated by more than 20% over the next 12 months.

We have already discussed above the latest housing market report for the Phoenix area. It shows no sign of cooling off in 2022. The entire Greater Phoenix area is breaking records over records in sales prices due to tight inventory and an increasing rate of price appreciation. It's still a seller's real estate market in Phoenix.

In a balanced real estate market, it would take about five to six months for the supply to dwindle to zero. In terms of months of supply, Phoenix can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s not going to happen. We can conclude that demand has not only recovered from the COVID-19 pandemic but has reached heights that make it very strong by any historical standard. Hence, Phoenix real estate market remains strong and skewed to sellers, due to a persistent imbalance in supply and demand.

Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in Phoenix in 2022 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance.

Phoenix Real Estate Investment: Should You Invest in Phoenix?

Should you consider Phoenix real estate investment? Many real estate investors have asked themselves if buying a property in Phoenix is a good investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2020. If you are looking to make a profit, you don’t want to buy the most expensive property on the Phoenix real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Phoenix that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.

Top Reasons To Invest In The Phoenix Real Estate Market

There are several other reasons to consider investing in Phoenix real estate.
Phoenix's housing market has been one of the highest appreciating communities not only in Arizona but in the nation as well.
Its more reasonably priced housing, lower cost of living, available workforce, and stable climate forecast a growing economy and stronger housing growth.
Phoenix home prices are now only back to where they were at the top of the real estate bubble in 2006, 12 years ago.
If you take into account inflation, however, Phoenix home prices are still 20% below the inflation-adjusted peak in 2005.
Current trends fairly predict that the Phoenix home prices and real estate appreciation rates in 2022 are very likely to be the same as in the past year.
In the latest quarter, Phoenix's real estate appreciation rate was at 11.85%, which equates to an annual appreciation rate of 56.50%.
The national economy is super strong and the number of people moving into Phoenix is finally strong again after tanking during the Great Recession.
Job growth has been vigorous for the past few years while single-family building permit activity has been relatively modest.
Phoenix is becoming a top destination for people living in high-cost areas like Los Angeles & Seattle.
After 18 months of extreme seller market conditions, the Greater Phoenix area is expected to be a seller's market in 2022, but one with weaker demand.
In seller markets, prices do not decline, but listings may remain active for a few additional days before accepting a contract.
A full-price offer may be sufficient to secure a home.
Purchasers may feel less compelled to waive appraisal and repair costs.

Let’s take a look at the number of positive things going on in the Phoenix real estate market which can help investors who are keen to buy an investment property in this city. We’ll address the biggest factor pulling people to the Phoenix housing market next.

Relatively Affordable Real Estate Market

While California and Florida are seen as hot real estate markets, one of the major attractions of the Phoenix real estate market is affordable real estate. During 2018 and 2019, Arizona was one of the top three states in the nation for population growth. Only Texas and Florida outpaced it, in terms of year-over-year growth. Population growth is particularly high within the Phoenix metro area. Homes in the Phoenix housing market are approaching the 2006 record. Home-price appreciation appears to be slowing a bit in the Phoenix area and most experts agree that prices will continue to climb for the foreseeable future.

According to the U.S. Census Bureau data, the population of the city of Phoenix rose by nearly 15% from 2010 to 2019. That’s well above the nation’s growth rate for that same timeframe. Population growth increases the demand for housing on both the purchase and rental sides. With all other things being equal, steady population growth tends to put upward pressure on home prices. The median home’s value has crossed $300,000 but that’s still cheaper than a starter home in coastal California. Don’t forget that the large retiree market means there is strong demand for one and two-bedroom houses and condos here, and those units are a fraction of the cost of a three-bedroom home.

High Rate of Appreciation Due To Short Supply

Although Phoenix has experienced consistent population growth, the housing market has not grown at the same rate. An Up for Growth study found that between 2000 and 2015 Arizona underproduced 505,134 housing units. This underproduction has caused a housing shortage in Phoenix. For example, in the last 30 years Phoenix produced approximately 220,000 new housing units, however, the population has grown by 820,000 people. Phoenix’s housing production has not kept pace with population growth.

This underproduction was magnified when construction virtually shut down during the recession of 2008. Since that time, construction has slowly increased but has not reached the level of production achieved before the recession. The current shortages of housing supply, relative to demand, are a primary reason housing costs are increasing. A significant increase in housing supply is necessary to keep pace with current and projected housing demand.

Highest Appreciating Phoenix Neighborhoods Since 2000 (List by Neighborhoodscout)

Central City North
Garfield
Kenwood / Whites
Artisan Commons
Dateland
East Citrus Acres
Woodshire / El Camello
Valencia Acres / Pomelo Park
Papago Peaks Village / Parkview Village Park
Arcadia Corners / Tavan

The Growing Phoenix Rental Market

There is always going to be high tenant turnover in student housing markets. The presence of universities also influences local home prices and rents. The capital of any state will be home to its flagship university, and Phoenix is no exception. Phoenix is so large that it doesn’t just host the flagship Arizona State University campus in Tempe. There are secondary campuses in downtown Phoenix, northwest Phoenix, and neighboring Glendale. These schools alone have more than seventy thousand students. The Arizona Summit Law School, Grand Canyon University, and several others are located here. There are easily 100,000 college students renting in the Phoenix housing market. You could invest in large single-family homes or multi-unit buildings to rent to students at any of these campuses.

Phoenix Rental Trends: 36% of the households in Phoenix are renter-occupied while 64% are owner-occupied. The rents are rising and it makes sense to keep your home and rent it out. In some neighborhoods, the average rental home may rent well over $2,500 a month.

As of May 15, 2022, the average rent for a 1-bedroom apartment in Phoenix, AZ is currently $1,345. This is a 25% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Phoenix decreased by -1% to $1,130. The average rent for a 1-bedroom apartment increased by 3% to $1,345, and the average rent for a 2-bedroom apartment increased by 2% to $1,625.

Two-bedroom apartment rents average $1,625 (an 18% increase from last year).
Three-bedroom apartment rents average $2,195 (an 11% increase from last year).
Four-bedroom apartment rents average $2,428 (a 10% increase from last year).

The “Zumper Phoenix Metro Area Report” analyzed active listings last month across 11 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Arizona one bedroom median rent was $1,327 last month. Scottsdale was the most expensive city with one bedrooms priced at $1,900 whereas Lake Havasu City ranked as the most affordable city with one bedrooms priced at $1,070.

The best place to buy rental property is about finding growing markets. Cities like Surprise and Glendale are good for investors looking to get started with rental property ownership at an affordable price. These trends provide a macro look at the growing rental demand. Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present their own opportunities for investors.

These cities look good for rental property investment this year as rents are growing over there.

The Fastest Growing Cities For Rents in Phoenix Metro Area (Y/Y%)

Surprise had the fastest growing rent, up 30.7% since this time last year.
Glendale saw rent climb 27.4%, making it second.
Chandler was third with rent jumping 25.8%.

The Fastest Growing Cities For Rents in Phoenix Metro Area (M/M%)

Phoenix, Mesa & Prescott rents had the largest monthly growth rates, all up 4.9%.
Surprise was second with rent increasing 1.2%.
Glendale saw rent climb 0.8%, making it third.

These are some of the most affordable neighborhoods where the rent prices are way below the average Phoenix rent.

Garfield, where the average rent goes for $665/month.
Papago Vista, where renters pay $690/mo on average.
La Mancha, where the average rent goes for $695/mo.

Phoenix Rental Market Trends — Source: Zumper

Phoenix's Growing Short-Term Rentals

There are more than 200 golf courses in Arizona, but most are located in and around the Valley of the Sun. There are several sports teams located in Phoenix and a wealth of tourist attractions. What makes Arizona unusual is the state’s open relationship with rental sites like Airbnb. A law that went into effect in 2016 made Arizona a leader in Airbnb rentals. The sites are required to collect taxes on the rentals, simplifying revenue collection for the state and the landlords. That probably explains why Airbnb guests grew by 150% in 2016 alone. The Airbnb market has exploded in Arizona during the past five years.

In late 2014, Phoenix only had 687 properties for rent listed on Airbnb. By March of 2019, that number had grown to 4,224 listed properties. This makes Phoenix a great place to buy a single-family home or condo to rent out to tourists (as a short-term rental). However, there are some restrictions on short-term rentals. In May 2019, the state government passed a bill allowing for more regulations of short-term rental operators in the state of Arizona.

In the bill, municipalities were allowed to restrict rentals to overnight stays and prohibit events that otherwise would require a permit, like weddings. Under the new law, owners of short-term rentals should have a sales tax license and they must list the sales tax license number on any advertisements (online/offline) for the property. Although, Phoenix’s short-term rental industry was hit hard by the COVID-19 pandemic the industry has shown resilience with relatively fair returns as owners implement safety measures to curb the spread of the virus and encourage guests to feel safe.

Phoenix is Landlord Friendly

If you want to invest in real estate, you typically want to do so in a market where you can quickly evict people who don’t pay their rent or damage property. You’ll be glad to know that the Phoenix real estate market is among these compared to surrounding states. Arizona, unlike California, allows landlords to serve an unconditional quit notice. If the tenant violates the rental agreement or doesn’t pay rent, they can be evicted quickly. Renter-friendly rules like requiring a landlord to return a rental deposit within two weeks are not a burden. Conversely, laws that say you can evict a tenant within ten days for lying on a rental application are a definite plus.

The Massive Snowbird Market

The snowbird movement is somewhat different than the conventional tourist market. Arizona has long attracted retirees who couldn’t afford Florida or wanted a cleaner, allergy-free air that never included storm clouds. Quartzite, Arizona in particular draws two million snowbirds and tourists. The city stands out for its sixty-plus RV parks. An estimated 300,000 people stay all winter before returning home. Some own second homes in Arizona communities restricted to active adults, while others stay in trailer parks. This creates an unusually diverse opportunity for those considering investing in the Phoenix real estate market.

Growing Retiree Market

The same things attract many people to Phoenix as snowbirds cause many to retire here permanently. This means that many snowbirds end up staying permanently in the Phoenix housing market. Sun City stands out as a mecca for seasonal and year-round retirees, but it is far from the only retirement community in the Phoenix real estate market. The aging of the U.S. population makes investing in communities catering to older adults an excellent idea. Suppose you buy a house to renovate and rent out. Phoenix deals with a large retiree population, both permanent and seasonal.

To accommodate aging in place, they’ve loosened the rules on building “accessory dwelling units”, commonly known as mother-in-law suites. The city also recognizes the need for affordable housing, and they allow people to build and rent out ADUs as affordable housing, especially if the property is within walking distance of public transit. Buy a house, rehab it, and build a granny flat, and you have two rental properties for not much more than the price of one. And the city is almost certain to approve it because they want denser development.

Low Taxes in Arizona

Kiplinger listed Arizona as the 8th most tax-friendly state in the U.S. in 2018. The state income tax is 2.59% for low-income earners, 4.54% for wealthier families. The median home is worth around $177,000 and came with a property tax bill of around $1400, well below what you’d pay in Texas. Arizona has been lowering its capital gains tax rate, as well. The state has a relatively low transfer tax on deeds or land contracts, too.

The Major Wave of Renovation in Downtown Phoenix

The section of Phoenix wedged between Seventh Street and Seventh Avenue is undergoing a wave of commercial redevelopment, fueled by more than five billion dollars invested to date. High-rise developments and mixed-use projects have been built, and several more are underway. Public transit in this area is significantly improved. That is making this area and neighborhoods bordering it an excellent place to invest in the Phoenix housing market. Phoenix isn’t just redeveloping downtown to create a dense, walkable urban core. It is cultivating fifteen complete walkable communities across the metro area with strong public transit, denser housing, and locally provided services. This is a radical shift from the suburban sprawl the area has long been known for.

Phoenix, Arizona Real Estate Investment Markets

Investing in Phoenix's real estate can be a worthy investment due to a steady rate of appreciation. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. The Phoenix housing market is one of the hottest markets for 2020. Don’t let memories of the Great Recession bust that cut home values in the Phoenix housing market keep you away. There are plenty of reasons to invest in the Phoenix real estate market, only ten of which we’ve provided above. Have a look at the Phoenix real estate investment prospects we have provided from various real estate sources and make the best possible decision for yourself.

Good cash flow from Phoenix investment properties means the investment is, needless to say, profitable. The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Phoenix investment property and you should be able to get a good return on your investment over the long term. The neighborhoods in Phoenix must be safe to live in and should have a low crime rate.

The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Phoenix might not be the best place to live in. A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. Some of the popular neighborhoods for buying a house or an investment property in Phoenix are Vistancia, Laveen, Deer Valley, South Mountain, Biltmore, DC Ranch, Arcadia, McDowell Mountain Ranch, Anthem, North Scottsdale, Cave Creek, Old Town, Litchfield Park, Trilogy at Vistancia and North Phoenix.

Phoenix real estate prices are well above average cost compared to national prices. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods. The inventory is low, but opportunities are there.

Even as Phoenix home prices have reached new heights, the market remains attractive to residential real estate investors. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain. The homebuyers won’t be able to outbid real estate investors and would end up renting. As with any real estate purchase, act wisely. Evaluate the specifics of the Phoenix housing market at the time you intend to purchase. These prices are from Realtor.com and can vary from time to time.

The super-hot housing market in Arizona has many other places for real estate investment. The Tucson real estate market is good for investment. Tucson like Phoenix sees a massive influx of snowbirds, retirees who flock here during the winter. That creates a large, seasonal rental market. The need for many retirees to sell their second homes when they can no longer travel or live independently provides an opportunity to snap up properties at a bargain rate. Better yet, a large number of those properties don’t have a mortgage on them. Other snowbirds sell their condo and move into single-family homes when they decide to stay in Tucson year-round.

Similarly, Scottsdale has a track record of being one of the best long-term real estate investments in the nation if you are an investor. The area contains a mix of families, young professionals, and retirees. There are several reasons to consider investing in Scottsdale real estate. You’ll see better than average returns on the average Scottsdale real estate investment property, and its value will be bolstered by a variety of factors. The Scottsdale housing market has a more diverse rental market than just catering to those who can’t afford to buy a single-family home. For example, the area is famous for its snowbirds, retirees who come for the winter before returning home. This makes Scottsdale a good place for real estate investing.

Chandler is bordered by the cities Tempe, Mesa, and Phoenix. It is home to about a quarter-million people. There are not suburbs to Chandler, because it is a suburb of Phoenix surrounded by other cities of similar size. However, Chandler has several points in its favor that make it a better choice for real estate investors than surrounding cities. The Chandler area offers strong market fundamentals in addition to a favorable tax and regulatory climate. This is in addition to a plethora of high-paying jobs that attract new residents and niche markets that are willing to pay higher rents in exchange for convenience and proximity to amenities.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Phoenix.

Consult with one of the investment counselors who can help build you a custom portfolio of Phoenix turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Phoenix.

Not just limited to Phoenix or Arizona but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Phoenix turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Let us know which real estate markets you consider best for real estate investing!

Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

REFERENCES

https://armls.com/
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Detroit Michigan Housing Market: Trends & Forecasts 2022

May 15, 2022 by Marco Santarelli

Investing in the Detroit housing market has been a source of contention for investors for a long time. The effects of the pandemic are visibly diminishing in 2021, and other indicators show that the city is beginning to recover its footing. When considering whether or not to add properties in the Motor City to your portfolio, keep these three current trends in mind. The city of Detroit is one of the most populous in the Midwest. It also serves as the county seat for Wayne County.

When it comes to residential in Detroit, home prices are exceptionally low. Detroit is the most affordable city, with a median sales price of 80,000, which is a growth of 7.5% from last April. The rentals can generate extremely high returns on investment. Since the purchase price of a Detroit single-family home is significantly less than $100,000, it presents a fantastic opportunity with significant returns and cash flow. It is also the fastest-growing city in the metro for rents, up 14.7% since this time last year.

Although the city's population is shrinking the number of millennials who are relocating to Detroit is steadily increasing. According to a recent study conducted by the Detroit Chamber of Commerce, metro Detroit experienced the second-highest growth among peer cities for people between the ages of 24 and 35 over the previous decade, ranking second among peer cities overall.

Even though prices in the Greater Metropolitan Area of Detroit have increased by more than 4.5 percent year over year, the median home price of $230,000 is significantly lower than the national median price of $375,300, providing investors with significant room to maneuver in terms of their profit margin. Is Detroit going to be one of the hottest real estate markets for investors in 2022 & 2023? Let’s take a look at the latest Detroit housing market trends to come to a conclusion.

Michigan Housing Market Trends 2022 (Most Recent)

Michigan real estate is becoming more expensive as more buyers compete for the same properties. The statewide data on residential homes from the 42 regional listing boards that comprise the Michigan Association of Realtors show that the average sales price increased 13.37 percent from a year earlier in Feb 2022. The median home price in Michigan went up from $213,155 to $241,644. The total residential sales in the state recorded a decline of -9.33% year-over-year, from 7,963 to 7,220 sales.

The rising prices are a reflection of a healthy Michigan housing market. A new high-water mark is being set in the number of sales in many Michigan communities. Huron County is the most affordable market in Michigan with a median price of $93,250, up 62.17% YoY. Emmet County is the most expensive with a median sales price of $483,136. The median home price in Detroit as reported by the Detroit Board of REALTORS® was $102,551 (Feb 2022).

According to Redfin, a real estate company, home prices statewide were up 8.0% year-over-year in April 2022. At the same time, the number of homes sold fell 8.2% and the number of homes for sale fell 3.4%. The latest trends show that the Michigan housing market is becoming increasingly competitive, with bidding wars becoming more common.

A large or increasing percentage of homes are selling for more than the asking price. In April 2022, 56.6 percent of the homes sold for more than the asking price, representing a 5.8 percent increase year-over-year. A high or increasing percentage of homes selling above list price suggests that the market is becoming more competitive.

Top 5 Most Competitive Housing Markets in Michigan in 2022

1. Grandville, MI: In April 2022, Grandville home prices were up 30.7% compared to last year, selling for a median price of $346K. On average, homes in Grandville sell after 6 days on the market compared to 5 days last year. There were 18 homes sold in April this year, down from 26 last year.

2. Walker, MI: In April 2022, Walker home prices were up 17.7% compared to last year, selling for a median price of $305K. On average, homes in Walker sell after 6 days on the market compared to 6 days last year. There were 27 homes sold in April this year, up from 23 last year.

3. Jenison, MI: In April 2022, Jenison home prices were up 20.2% compared to last year, selling for a median price of $310K. On average, homes in Jenison sell after 5 days on the market compared to 5 days last year. There were 17 homes sold in April this year, down from 30 last year

4. Northview, MI: In April 2022, Northview home prices were up 40.5% compared to last year, selling for a median price of $295K. On average, homes in Northview sell after 5 days on the market compared to 7 days last year. There were 11 homes sold in April this year, down from 19 last year.

5. Zeeland, MI: In April 2022, Zeeland home prices were up 48.9% compared to last year, selling for a median price of $350K. On average, homes in Zeeland sell after 5 days on the market compared to 6 days last year. There were 23 homes sold in April this year, up from 13 last year.

Redfin's Compete Score measures an area's competitiveness on a scale of 0 to 100, with 100 indicating the most competitive area. The Compete Score is determined primarily by four inputs: the number of competing offers, waived contingencies, sale to list ratio, and days on market.

Let us also look at the price trends recorded by Zillow over the past few years. Since the last decade (May 2012), the typical home value in Michigan (statewide) has appreciated by nearly 138.5% (Zillow Home Value Index). ZHVI reflects the typical value for homes in the 35th to 65th percentile range. Currently, the typical value of homes in Michigan is $231,865. Over the past year alone, home values have gone up by 16% due to robust housing demand and low mortgage rates.

Greater Detroit Real Estate Market Trends 2022 (YOY Change)

Compared to the previous year, homes in the Greater Metropolitan Area of Detroit area stayed on the market for an average of 22 days in April 2022. The median sales price went from $220,000 to $230,000, up + 4.5%. The Months Supply of Inventory is 1.2. Several regions saw home price gains in double-digits. In the City of Detroit, the median home price shot up 7.5%, from $80,000 $74,450, according to Realcomp April 2022 Statistics published by the Greater Metropolitan Association of REALTORS® (GMAR).

Here are the most recent residential stats for the Greater Metropolitan Area of Detroit, including but not limited to locales in Lapeer, Macomb, Oakland, Washtenaw, and Wayne Counties.

Median Sale Price increased by 4.5% from $220,000 to $230,000.
The average days on market (DOM) decreased by 4.3% from 23 to 22 days.
The average % of the last list price received increased by 1.2% from 101.6% to 102.8%.
New Listings decreased by 09% from 5,429 to 5,381.
Pending Sales decreased by 1.5% from 4,283 to 4,217.
Closed Sales decreased by 5.2% from 3,927 to 3,724
Months-Supply of Inventory ticked up by 9.1% from 1.1 to 1.2.

Other large price gains in the Detroit Area housing market were made in:

Dearborn/Dearborn Heights, +25.7%
Huron County, +36%
Hillsdale County, +21.6%
Lenawee, +37.1%
Lapeer County, +18.3%
Monroe County, +16.9%
Shiawassee County, +13.3%
Washtenaw County, +15.5%

Detroit (Wayne County) Housing Market Trends 2022

Wayne County is the most populous county in the U.S. state of Michigan. As of 2020, the United States Census placed its population at 1,793,561 making it the 19th-most populous county in the United States. The county seat is Detroit. Single-family detached homes are the single most common housing type in Detroit, accounting for 66.04% of the city's housing units. Three and four-bedroom single-family detached homes are the most common housing units found in Detroit. Detroit city has a mixture of owners and renters, with 47.23% owning and 52.77% renting.

As per Realtor.com, in April 2022, the median list price of homes in Wayne County, MI was $159.9K, trending flat year-over-year. The median listing price per square foot was $131. The median sale price was $170K. Homes in Wayne County, MI sold for 1.47% above the asking price on average. Wayne County was a buyer's market as it had a total sales to total listings ratio below 0.12 which tends to favor buyers. In other words, it means that the supply of homes is greater than the demand for homes.

Northville has a median listing home price of $499.9K, making it the most expensive city. Detroit is the most affordable city, with a median listing home price of $80K.

These are the latest stats (Residential) published by the Greater Metropolitan Association of REALTORS® for April 2022.

Median Sale Price was up by 1.1% from $175,000 to $177,000.
Pending Sales were up by 9.9% from 1,593 to 1,751.
Closed Sales were down by 1.1% from 1,514 to 1,497.
The average days on market (DOM) increased by 4.2% from 24 to 25 days.
The average % of the last list price received increased by 0.7% from 100.6% to 101.3%.
New Listings increased by 6.9% from 2,087 to 2,230.
Months-Supply of Inventory was up by 15.4% from 1.3 to 1.5.

Detroit Metro Housing Market Forecast 2022

What are the Detroit metro real estate market predictions for 2022? In the last decade, Detroit has seen some of the highest home appreciation rates in the country. Let us also look at the price trends recorded by Zillow over the past few years. Since the last decade (May 2012), the typical home value in Detroit-Warren-Dearborn Metro has appreciated by nearly 160% (Zillow Home Value Index).

ZHVI reflects the typical value for homes in the 35th to 65th percentile range. Currently, the typical value of homes in Detroit-Warren-Dearborn Metro is $238,278. Over the past year alone, home values in this region have gone up by 15.3% due to robust housing demand and low mortgage rates.

Detroit-Warren-Dearborn Metro home values have gone up 15.3% over the past year and will continue to rise in the next twelve months.
Detroit City home values have gone up 28% over the past year (current = $66,015) and will continue to rise in the next twelve months.
Wayne County home values have gone up 17.1% over the past year (current = $156,811) and will continue to rise in the next twelve months.
Oakland County home values have gone up 15.7% over the past year (current = $343,479) and will continue to rise in the next twelve months.
Warren home values have gone up 15.6% over the past year (current = $183,522) and will continue to rise in the next twelve months.
Dearborn home values have gone up 16.6% over the past year (current = $209,755) and will continue to rise in the next twelve months.

Here is the graphical representation of the historical Detroit metro house price growth by Zillow.

Detroit Real Estate Market Forecast — Credits: Zillow

According to Neigborhoodscout, over the last decade, Detroit real estate has appreciated 79.22 percent, which equates to an average annual appreciation rate of 6.01 percent, placing Detroit in the top 30% of all cities for real estate appreciation. In the last twelve months, Detroit's appreciation rates have remained among the highest in the country, at 18.01 percent. Short-term real estate investors have found success in Detroit over the last twelve months. Detroit appreciation rates were 6.89 percent in the most recent quarter, equating to a 30.53 percent annual appreciation rate.

Here are the best neighborhoods to invest in Detroit rentals because they have the highest appreciation rates since 2000 (List by Neigborhoodscout.com).

Rosa Parks Southeast
University West
West Village
Mcdougall Hunt South
Condon East
Corktown
Jeffries
Brush Park
Mcdougall Hunt West
University

Detroit Real Estate Investment Overview 2022

Investing in real estate is touted as a great way to become wealthy. Should you invest in Detroit rental real estate? Many real estate investors have asked themselves if buying rental property in Detroit is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Detroit housing market forecast for answers on why to put resources into this market.

Detroit is the most populous city in the U.S. state of Michigan, the largest city on the United States – Canada border, and the seat of Wayne County. The municipality of Detroit had a 2016 estimated population of 672,795, making it the 23rd-most populous city in the United States. New data from the 2020 U.S. Census shows Michigan’s largest city continued a seven-decade trend of losing residents. Detroit’s population decline has been evident in every census since the city’s peak in 1950 when 1.8 million people lived there. Detroit was home to 639,111 residents in 2020, according to new data released by them, a drop of 10.5% or almost 75,000 residents from a decade ago.

It's also the seventh straight decade Detroit's population has declined since the census showed the city with nearly 1.85 million residents in 1950 However if you consider the metropolitan area, known as Metro Detroit, is home to 3.53 million people, a 0.51% decline from 2020. According to Wikipedia, it is the second-largest in the Midwest after Chicago. Since many older residents are moving back in and new businesses are bringing increased job opportunities for the city, there could be an upward population growth trend soon.

Although, this article alone is not a comprehensive source to make a final investment decision for Detroit we have collected ten evidence-based positive things for those who are keen to invest in the Detroit rentals in 2021 or 2022. Investing in Detroit rentals will fetch you good returns in the long term as the home prices in Detroit have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Detroit real estate market which can help investors who are keen to buy an investment property in this city.

Is Detroit's Economy Growing?

Compared to many other real estate markets across the country, Detroit is an affordable market to both invest in or rent real estate in the current year of the housing boom (led by the pandemic). The city also has the headquarters of many Fortune 500 companies which is directly proportional to the city’s economic and employment development. The most heavily represented sectors are manufacturing (particularly automotive), finance, technology, and health care.

The most significant companies based in Detroit include General Motors, Quicken Loans, Ally Financial, Compuware, Shinola, American Axle, Little Caesars, DTE Energy, Lowe Campbell Ewald, and Blue Cross Blue Shield of Michigan, and Rossetti Architects. On May 21, 2014, JPMorgan Chase announced that it was injecting $100 million over five years into Detroit's economy, providing development funding for a variety of projects that would increase employment. It is the largest commitment made to anyone city by the nation's biggest bank.

Between 2010 and 2019, the Detroit metropolitan area's economy expanded, and labor force participation increased. Automobile manufacturing continues to be Detroit's largest industry. Despite losing nearly 40% of its manufacturing jobs in the 1980s, the automotive industry continues to be the city's primary economic driver. According to UofM, between 2012 and 2019, Detroit’s poverty rate plummeted from 42.3% to 30.6%. This equates to 77,000 fewer Detroiters in poverty in 2019.

Detroit’s nearly 12 percentage point decline in poverty was larger than that of most large industrial cities in the Midwest and Northeast. For comparison, Cleveland and Philadelphia saw declines of 5.3 and 3.6 percentage points, respectively. Detroit’s poverty rate in 2019 was the city’s lowest in more than a decade and below what it was in 2007, before the last major economic downturn.

The city of Detroit is making clear progress in its economic recovery from the pandemic, notching gains in employment and wages and drops in joblessness that are expected to continue over the next few years, according to a University of Michigan study.

RSQE is a modeling and forecasting unit that has been in operation at the University of Michigan since 1952. Its most recent forecast for the city of Detroit's economy was released on February 18th, 2022. They estimate that Detroit residents have now recovered four-fifths of their job losses from the start of the pandemic. They are forecasting strong growth to continue in 2022, with 12,200 job gains at Detroit establishments.

Detroit’s job growth will then moderate over the rest of our forecast horizon, to 8,900 jobs in 2023, 3,500 in 2024, and an average of 1,300 per year in 2025–26. The city’s job count will return to pre-pandemic levels in 2023 and then climb to a level of 8,500 jobs higher than in 2019 by 2026. We expect blue-collar jobs to lead the way, with services industries returning to roughly their pre-pandemic employment levels by the end of our forecast.

In 2022, UofM projects the city’s unemployment rate to register at 9.9 percent, which is likely to be substantially lower than the revised rate for 2021.
In their forecast, the city’s unemployment rate falls to 8.7 percent in 2023 and then remains near that level through 2026.
UofM is expecting average wages to climb by 4.1 percent in 2022 and 3.6 percent in 2023.
Average wage growth will then hover around 3 percent per year from 2024 through 2026.
That is slightly faster wage growth than we are projecting for the state overall.

Increasing Detroit Home Values

Since residential properties in Detroit still have price tags that vary significantly from other real estate markets, investors can find properties at lesser a price than in other markets. However, within the city, these prices are increasing at a rapid pace (+28% YOY) and investors are encouraged to consider this market since the growth is expected to stay for a long time. The typical value of homes in Detroit is $66,015 (ZHVI). This value is seasonally adjusted and only includes the middle price tier of homes.

Detroit is an Affordable & Growing Housing Market

While the general rates of the Detroit real estate market are increasing, buying a property here is still more affordable than in other competitive markets. Even though housing prices in Detroit are rising, among large cities, Detroit is still pretty affordable. There are an estimated 500,000 rental units in the Detroit-Warren-Dearborn metro area that are affordable to someone making up to 60% of the area median income, according to an analysis of 2019 American Community Survey data. Investing in the Detroit real estate market today will get potential owners a range of properties at cheaper rates and they can either rent them out for improved cash flow or sell them whenever the market is soaring high.

Detroit Rental Market

Those looking for investing in rental properties to improve their cash flows can confidently consider Detroit real estate market for both housing and commercial properties. Although Detroit's rent is affordable compared to other big cities, rent has gone up within the city over the past few years. Affordability ranked as the top factor in renters deciding to move, with job opportunities coming in second. This is one of the main reasons that many residents who had previously moved away from the city for better prospects are coming back and restoring their properties to get the advantage of increased rental rates.

Construction has been booming in Detroit these past couple of years. A majority of that construction has been in the Detroit housing market, and even more so rentals. A report from RentCafe.com showed the metro areas around the country building the most apartments, and while metro Detroit is pretty far down the list, but showing a steep increase from last year. 175% increase, to be exact, adding 1,615 new rentals to the market in 2017. Of the new rentals available, 785 are in the city. The new developments along the Riverfront and Lafayette Park open this year, specifically Orleans Landing and DuCharme Place.

The Zumper Detroit Metro Area Report analyzed active listings last month across 5 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Michigan one bedroom median rent was $953 last month. Ann Arbor was the most expensive city with one bedrooms priced at $1,300 whereas Warren was the most affordable city with one bedrooms priced at $850.

The Fastest Growing Cities in Detroit Metro Area For Rents (Y/Y%)

Detroit had the fastest growing rent, up 14.7% since this time last year.
Ypsilanti saw rent climb 13.1%, making it second.
Ann Arbor was third with rent increasing 11.1%.

The Fastest Growing Cities in Detroit Metro Area For Rents (M/M%)

Royal Oak had the largest monthly rental growth rate, up 4.3%.
Ypsilanti rent grew 2.2% last month, making it second.
Ann Arbor was third with rent climbing 1.6%.

Detroit Rental Market Trends — Source: Zumper

Thriving Detroit Downtown

Owing to rapid growth in the demographics of Detroit in recent years, its downtown is also seeing significant development and has improved the quality of life for the residents of this city in Michigan. In the central portions of Detroit, the population of young professionals, artists, and other transplants is growing and retail is expanding. This dynamic is luring additional new residents, and former residents returning from other cities to the city's Downtown along with the revitalized Midtown and New Center areas. There are popular eateries, sports teams with significant fan bases, regular concerts, and a generally happening nightlife.

The same could not be said for this city a few years ago and now it attracts several businesses and consequently, families that choose to live here. Many large corporations already have their presence in Detroit and many more businesses are being attracted to the city owing to its fast growth. This growth directly translates to increased jobs in the city, which also means more demand for residential properties. Keeping its current growth in view, Detroit real estate market is also a budding prospect for entrepreneurs who are looking for affordable rents and properties in growing markets.

Tourism In Detroit

Because of its unique culture, distinctive architecture, and revitalization and urban renewal efforts in the 21st century, Detroit has enjoyed increased prominence as a tourist destination in recent years. The New York Times listed Detroit as the 9th-best destination in its list of 52 Places to Go in 2017, while travel guide publisher Lonely Planet named Detroit the second-best city in the world to visit in 2018.

Metropolitan Detroit is a hub for entertainment options where many festivals are organized regularly, including musical shows and cruises, and has a wide range of hotels to choose from. Other tourist attractions include parks and museums which tourists frequent all year round. Owing to its many tourist attractions, the city constantly needs short-term and affordable residential options.

Detroit Government Initiatives

The government of Detroit has also been playing an important role when it comes to the development of the real estate market in the city. Developing parks and green zones around the city and improving the urban quality of life in the suburbs and all over the city. This is another reason for the rapid development of the Detroit real estate market.

Generally, Detroit is a city home to people from various walks of life coming from a range of financial and economic categories. This is a healthy environment for families and businesses to flourish in as it offers a balance of both modernity and tradition. Detroit's real estate market holds a high value since it offers a well-rounded lifestyle for people who choose to reside in or move back here.

Education

Detroit is home to several institutions of higher learning including Wayne State University, a national research university with medical and law schools in the Midtown area offering hundreds of academic degrees and programs. The University of Detroit Mercy, located in Northwest Detroit in the University District offers more than a hundred academic degrees and programs of study including business, dentistry, law, engineering, architecture, nursing, and allied health professions.

The University of Detroit Mercy School of Law is located Downtown across from the Renaissance Center. With about 66,000 public school students (2011–12), the Detroit Public Schools (DPS) district is the largest school district in Michigan. Detroit has an additional 56,000 charter school students for a combined enrollment of about 122,000 students.

Health

Within the city of Detroit, there are over a dozen major hospitals which include the Detroit Medical Center (DMC), Henry Ford Health System, St. John Health System, and the John D. Dingell VA Medical Center. DMC is the largest private employer in the City of Detroit. The center is staffed by physicians from the Wayne State University School of Medicine, the largest single-campus medical school in the United States, and the United States' fourth largest medical school overall. In 2011, Detroit Medical Center and Henry Ford Health System substantially increased investments in medical research facilities and hospitals in the city's Midtown and New Center.

Transportation

With its proximity to Canada and its facilities, ports, major highways, rail connections, and international airports, Detroit is an important transportation hub. The Ambassador Bridge in Detroit is the single busiest border crossing in North America, carrying 27% of the total trade between the U.S. and Canada. Mass transit in the region is provided by bus services.

The Detroit Department of Transportation (DDOT) provides service to the outer edges of the city. From there, the Suburban Mobility Authority for Regional Transportation (SMART) provides service to the suburbs and the city with SMART's FAST service. FAST is a new service powered by SMART, which offers limited stops and connects the suburbs to downtown quickly and easily.

Summary

NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.

Another good market to choose for investment is Savannah, GA. The Savannah area is evolving from a small town to a regional services hub with a diversified economy. It is never going to be a booming metropolis like Atlanta, but that won’t prevent it from being a great real estate investment. Many people are moving here for the ideal balance between the small-town feel and great amenities like a world-class hospital and international airport. The Savannah housing market is seeing significant appreciation due to strong demand and slower-growing inventory. Savannah home values have gone up 17.1% over the past year and are projected to continue to increase over the next twelve months.

The other good place to invest in real estate is Chico, CA. The Chico real estate market provides strong rental returns, a favorable legal and tax climate, and near-certain and significant property appreciation. These are among a few of the reasons to consider Chico real estate investment over “hotter” real estate markets due for a correction. The Chico real estate market is affordable when you compare it to the rest of California. The typical value of homes in Chico is $444,278.

Chico home values have gone up 14.2% over the past year. In August 2021, Chico home prices were up 5.5% compared to last year, selling for a median price of $445K (source: Redfin). On average, homes in Chico sell after 19 days on the market compared to 20 days last year. Many homes get multiple offers, some with waived contingencies.

Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References

https://gmaronline.com/resource-library

https://www.mirealtors.com/housing-statistics

https://www.zillow.com/detroit-warren-dearborn-mi/home-values/

https://www.zumper.com/blog/detroit-metro-report/

https://www.redfin.com/state/Michigan/housing-market/

http://www.freddiemac.com/research/indices/house-price-index.page

https://www.realtor.com/realestateandhomes-search/Wayne-County_MI/overview

https://www.neighborhoodscout.com/mi/detroit/real-estate

https://www.pioneerhomesus.com/why-detroit

https://en.wikipedia.org/wiki/Detroit

https://www.biggerpockets.com/renewsblog/detroit-real-estate-market

https://www.verticalrent.com/entry/7-reasons-why-the-detroit-real-estate-market-is-heating-back-up

https://detroitmi.gov/news/uofm-economic-forecast-shows-detroits-employment-recovery-covid-exceeding-expectations

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Michigan Housing Market Trends 2022 (Most Recent)

Greater Detroit Real Estate Market Trends 2022 (YOY Change)

Detroit (Wayne County) Housing Market Trends 2022

Detroit Metro Housing Market Forecast 2022

Detroit Real Estate Investment Overview 2022

Is Detroit's Economy Growing?

Increasing Detroit Home Values

Detroit is an Affordable & Growing Housing Market

Detroit Rental Market

Thriving Detroit Downtown

Tourism In Detroit

Detroit Government Initiatives

Real Estate

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