11 Real Estate Market Trends You Can Leverage in 2022
Know these 11 market drivers in today's real estate industry — and use them to adjust and thrive.
To grow your business in 2022, you need to understand Florida’s fast-changing real estate landscape. As the impact of the COVID-19 pandemic recedes, it’s time to think about finding new opportunities to generate business by serving buyers, sellers and investors.
“This is the time of year when sales associates should be business planning,” says Budge Huskey, president and CEO of Premier Sotheby’s International Realty in Naples. “After the hot market of the last 18 months, associates will be facing a different environment and should think about how to gain a competitive advantage.”
Here is a look at the trends that could create opportunities for your business this year.
While every local market in Florida is different, these big trends are likely to play out across the state.
1. Generate new listings from Boomers
Strong in-migration, combined with the natural growth of the millennial and Gen Z generations, means demand for homes will continue to outpace the supply of homes for sale, says Huskey. “Sales associates need to look at how to generate listings and focus on their relationships with current owners,” he says. “That will be critical to generating more sales.”
Bernice Ross recommends reaching out to boomers, ages 55 to 75. “The boomers own 42% of homes nationwide,” says Ross, CEO and president of BrokerageUP! Inc. and RealEstateCoach.com in Austin, Texas. “Many face issues with their health, including mobility, which can impact their ability to live independently. Since this generation controls so much of the single-family home inventory, a huge proportion of these homes will be coming on the market in the next few years.”
To leverage this trend: Ross suggests looking for homeowners ages 60-plus with large or two-story homes who may be ready to move to a single-story home or are interested in a “lock and leave” lifestyle in retirement. “Look for older single homeowners, especially women, who may be unable to maintain their properties due to financial or other constraints and may opt for a condominium.
2. Serve international buyers
For decades, Florida has been a favored destination for international buyers from Canada, Europe, South America, the Middle East and even the Pacific Rim. That trend came to an abrupt halt in early 2020 with the COVID-19 travel restrictions. Now that borders are opening again, a surge of international buyers is expected.
“Homes here are very affordable compared with other resort locations, especially considering the high tax rates in Europe and South America,” says Steve Murray, senior advisor to Texas-based RealTrends. “Florida is also the top state for wealthy individuals and families who want to acquire residences outside their home countries.”
Canadians also are likely to return to the Florida market, adds Huskey. “Certainly, international buyers, in general, will have a greater impact in 2022 than in the past two years.”
To leverage this trend: Reach out to prospects who have made online inquiries over the past two years and invite them to visit your community. You can also cultivate relationships with international residents who live here and may have family or friends who are ready to join them in Florida.
3. Offer iBuyer options
A growing number of buyers and sellers like the convenience of an iBuyer program, so Florida brokers and sales associates can gain a competitive advantage by offering financing options. Zillow axing its iBuyer program doesn’t change that. “More brokers will partner with companies to offer these financial services, along with software to present the options,” says Murray. “A broker could get bids from three companies and compare them with current listings.”
Ross agrees, noting that iBuyers are reshaping the contingent sale situation. “They turn a seller into a buyer by providing a mortgage on the hew home, deferring payments until the owner closes on the existing home. They earn their money on the spreads between purchase and sale, and some charge an additional convenience fee.”
Jack Miller, president of T3 Sixty in Ladera Ranch, California, says large organizations like Ribbon, Knock, Flyhomes and RealSure by Realogy are driving this trend. “Along with iBuyer options, there are buy-before-you-sell financing programs, bridge loans and other mechanisms that reduce friction in the transaction,” he says. “Consumers want to get on with their lives, and many will pay for that convenience.”
To leverage this trend: Brokers and sales associates need to be “iBuyer equipped,” says Mike Pappas, president and CEO of The Keyes Company in Miami. “That means being able to educate consumers on the benefits and disadvantages of this option.”
4. Consider new construction
If the inventory of active listings is tight, consider reaching out to residential builders who are bringing new homes to your local market. “This will be a good year to get involved with infill and boutique residential and mixed-use developments,” says Huskey. “Builders are looking for buyers and may be willing to give you the listing.”
To leverage this trend: Along with listing new homes, sales associates can help builders looking for vacant or underused properties suitable for their next single-family or multifamily projects.
5. Look into institutional buyers
In some parts of Florida, institutional buyers like Blackstone and Tishman Speyer will be looking to buy homes to rent for future income or flip for a rapid profit. “Everyone talks about institutional buyers, but they are still a small percentage of the total market,” says Murray. “Sales associates should be aware of their activities if they’re active in your market,” noting that these buyers tend to focus on established neighborhoods, where a competitive market analysis can quickly determine potential purchase and sale prices.
To leverage this trend: Reach out to an institutional buyer in your market and offer to help find prospective sellers whose properties can be added to the portfolio.
6. Keep an eye on foreclosures
Ross expects an increase in foreclosures in 2022. Millions of homeowners faced a significant drop in their take-home pay during the COVID-19 pandemic, she says. Others own homes and rental properties as investments—but have gone without income for many months.
Because of the moratorium on evictions, there is a backlog of homeowners who have not paid their bills,” says Pappas. “There will be an uptick, but not an onslaught like we saw in the last recession.”
To leverage this trend: Find homeowners who are behind in their payments but may still have substantial equity due to appreciation. “You can advise them on selling quickly to clean up that past debt,” says Pappas.
7. Get in on the green home trend
Everyone wants to live in a healthy environment—especially with today’s work-from-home lifestyle. But not everyone wants to pay for upgrades like solar panels, energy-efficient appliances or other green features, says Huskey. “A home’s health and safety features seem to be more important at the upper end of the market,” he adds.
To leverage this trend: Highlight a listed home’s ecologically friendly features, including the benefits of an indoor-outdoor lifestyle, Huskey says. You could also calculate the potential annual savings in utility costs to make the listing more attractive.
8. Make affordability a priority
Gen Z and millennials are poised to enter Florida’s housing market—provided they can afford the monthly payments. In the past two years, home prices have risen dramatically with no sign of a downturn in 2022.
To leverage this trend: Explore financial support options for first-time buyers, including local or regional assistance programs. “You should also look at all the factors involved in purchasing a home,” adds Pappas. “For example, you might discuss increasing the deductible on a home insurance policy to reduce the premium.”
9. Take inflation into account
From construction materials to home appliances and automobiles, supply chain shortages are pushing up prices for consumers. A global energy shortage is also increasing the price of gasoline, oil and natural gas. In other words, inflation returned to the U.S. economy in 2021.
While some economists expect these pressures to subside in 2022, real estate professionals need to pay close attention to changes in the Consumer Price Index (CPI) as well as the Federal Reserve’s actions that affect interest and mortgage rates. An inflation-related bump in mortgage rates would make homes less affordable for buyers with limited incomes.
To leverage this trend: For buyers, you could highlight the “move-in-ready” features of a home that minimizes the need for potential expensive upgrades. For investors, you could point out that residential and commercial real estate properties values tend to keep pace with inflation, making them attractive long-term assets.
10. Be mindful of increased regulation
Increased regulation and enforcement are on the rise, says Ross, including a big jump in the IRS’s tax enforcement budget, and a stronger emphasis on following Fair Housing regulations. “For the real estate industry, this means increased testers—people who pose as clients to test discriminatory behaviors—and more prosecutions of violators.
To leverage this trend: “Having a systematized approach where every client is treated exactly the same with the highest level of professional service is imperative,” says Ross.
11. Consider industry consolidation
Industry consolidation will accelerate in 2022, according to Miller. “More companies are being bought up, including brokerages and real estate technology companies,” he says. “Private equity and publicly traded companies are moving into the real estate industry, and that trend will accelerate this year.” As a result, traditional brokers may be competing with sophisticated, well-
funded companies with deep pools of capital. “Your margin for error is lower,” he adds.
To leverage this trend: The influx of capital can allow brokers to cash out and retire from real estate or look for another career opportunity. For sales associates, the potential benefits include a stronger technology platform and tools.
In that regard, understanding industry consolidation—like the 10 other trends above—provides an opportunity to leverage your knowledge and gain a competitive advantage to achieve your business goals in the year ahead. #
Richard Westlund is a Miami-based freelance writer.