Investing in real estate: characteristics and forecasts

 2022 was a very busy year for the real estate market. At first, would-be buyers found themselves in a very difficult situation, with real estate boasting very diversified house prices that, in some international markets (such as the US) had touched the same.

In recent months, however, the stocks available on the market have increased and house prices have begun to decline in the same markets where these cycles have been most affected (a little less in Italy, where prices have been slow). .

For international buyers, however, the benefits of these shifts have been offset by rising mortgage rates and growing uncertainty about future financing costs in light of further rate hikes expected by central banks .

Now, whether you are a real estate investor or an ordinary person hoping to buy a home, it is important to know what to expect from the housing market in the latter part of 2022 and beyond.

Unsold homes are likely to increase

In July, the National Association of Real Estate Agents reported that the inventory of unsold homes on the market was 1.31 million, with a supply of 3.3 months, based on the pace of sales in the US market at the time. . This is an increase compared to January: at the time, there were only 860,000 homes available for sale. But a 3.3-month offer isn't enough to meet buyer demand. For this to happen, a minimum of 4 months of offer is generally required, and - therefore - in a market as relevant for real estate investors as the USA it is a very low value.

However, as further progress has been made on the stock of apartments during the summer, it is safe to assume that the supply of available homes will continue to increase. Sellers are fully aware that economists have sounded recession alarms and that the Federal Reserve's policy rate hikes could push other buyers out of the market. They are likely to act accordingly, putting their homes up for sale as soon as possible.

Meanwhile, as inventories continue to rise, house prices are expected to start falling. And this could offer more opportunities for buyers .

Home sales are expected to slow in key markets

In the US in July, the National Association of Realtors reported that existing home sales fell for the sixth consecutive month. Sales for July were down 5.9% from the previous month and 20.2% from the previous year.

Home sales may continue to slow as buyers pull back on recession fears or are scared of rising mortgage rates. But one of the overriding reasons home sales have declined is that there are not many real estate stocks, as we have already anticipated above. It is therefore good that sellers do not panic about a recession in the real estate market that could partially infect our market as well.

Mortgages will become more expensive

One thing is certain: neither the Federal Reserve nor the European Central Bank have yet finished their moves to fight inflation. Therefore, further federal funds rate hikes are likely to occur this year, which in turn should drive mortgage rates higher.

This does not mean that buyers should expect a drastic hike in mortgage rates. However, the impacts on mortgage payments will not fail to be felt in a non-marginal way.

Of course, these are some of the forecasts for those who invest in international real estate and, as such, are based on factors such as changes in real estate stocks and home sales numbers. It is therefore not certain that they will occur: a wait-and-see attitude, for the next few weeks, could be healthy ...

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