The US Real Estate Market is constantly changing and evolving, as does the opportunities it brings. Whether you are a real estate professional, new or seasoned investor or a potential homeowner, the following US map and market analysis will help you better understand the current landscape. Click on a state below to get started!
The U.S. real estate market has experienced every end of the housing spectrum over the last decade. More than ten years ago, real estate market trends bottomed out during the Great Recession. Today, the housing sector has made great strides. Despite the introduction of the Coronavirus, real estate appears to be firing on all cylinders. Most of the indicators used to analyze the U.S. real estate market suggest things are more stable than they appear on the surface.
As positive news on the virus front spreads, and businesses are phased back, the U.S. economy will persevere, just as it always has. Pent-up demand within the housing sector, in particular, should break through sooner rather than later. In addition, activity within the U.S. real estate market could very well serve as the catalyst the economy needs to live up to its potential. Demand appears to have remained intact, and an influx of buyers should help the market get back up to speed.
That is not to underestimate our current situation, but instead suggest there is light at the end of the tunnel. As things currently stand, several obstacles need to be overcome, which begs a few questions: What does the current state of the American housing market mean for today’s investors? What does the real estate investing landscape look like for investors across the country, now and for the foreseeable future? Will the U.S. housing market crash in 2022 or thrive?
The following provides an in-depth look at the current state of the U.S. real estate market and sheds some light on how investors may approach the rest of 2022.
Real Estate Market Overview 2022
Median Home Value: $344,141
Median List Price: $404,333
1-Year Appreciation Rate: +20.9%
Median Home Value (1-Year Forecast): +11.6%
For Sale Inventory: 740,000 (-34.3% year over year)
New Listings: 361,995 (-25.9% year over year)
Homes Sold: 86,071 (-8.1% year over year)
Median Days To Pending: 7 (Unchanged year over year)
Median Rent: $1,343 (+12.5% year over year)
Rental Vacancy Rate: 5.8% (-0.6% year over year)
Price-To-Rent Ratio: 21.35
Delinquency Rate: 2.8% (-2.2% year over year)
Unemployment Rate: 3.6% (latest estimate by the Bureau Of Labor Statistics)
Population: 331,893,745 (latest estimate by the U.S. Census Bureau)
Median Household Income: $64,994 (latest estimate by the U.S. Census Bureau)
The Top U.S. Real Estate Markets In 2022
The top U.S. real estate markets in 2022 are directly correlated to the new marketplace created in the wake of the Coronavirus. In particular, we are seeing a transition from larger, primary cities to smaller, secondary cities. Thanks, in large part, to new work-from-home trends, buyers are vacating the expensive confines of today's most expensive cities and trading living situations for more affordable alternatives.
The current landscape is shifting quickly, which begs the question: Where is the hottest real estate market in the United States? While answers may vary based on individual circumstances, the following markets can make a strong case for the best in the country:
Austin is exhibiting some of the strongest real estate market trends in the country. If for nothing else, the fourth largest city in Texas became the primary beneficiary of new market indicators created by the pandemic. In particular, work-from-home trends enabled more residents to trade the crowded confines of larger primary cities like Dallas, San Antonio and Houston for the Austin real estate market. In fact, positive net migration onset by one of the best up-and-coming tech hubs in America caused Austin’s median home value to appreciate at nearly twice the rate of the previously mentioned cities since the beginning of the pandemic.
When all is said and done, Austin’s attractive employment opportunities have attracted buyers from all over the country, and the local housing market has benefited immensely. If local real estate market trends continue on their current trajectory, Austin is well positioned to remain one of the top U.S. real estate markets in 2022 and beyond.
Median Home Price: $681,389
1-Year Appreciation Rate: +40.8%
1-Year Appreciation Forecast: +15.0%
Median Rent: $1,654
Raleigh appears to be another beneficiary of current real estate market trends. Most notably, the Raleigh real estate market became the location of choice when more people were granted the freedom to work from home. As residents of Charlotte looked for an alternative place to live, Raleigh quickly caught the attention of many home buyers. In fact, demand for real estate in Raleigh has been so high over the course of the pandemic that local appreciation rates have outpaced those in Charlotte.
Demand appears to stem from the multitude of opportunities presented to the millennial population. In addition to boasting an elite education system, Raleigh is also home to the Research Triangle. Otherwise referred to simply as The Triangle, the Research Triangle is a metropolitan area which consists of three major research universities: North Carolina State University, Duke University, and the University of North Carolina at Chapel Hill. The area serves as a catalyst for burgeoning millennial carries and a great place to buy a first-time home. The unique convergence of opportunity and small-town feel make Raleigh one of the hottest markets in the country for America’s largest home buyer population.
Median Home Price: $448,197
1-Year Appreciation Rate: +34.8%
1-Year Appreciation Forecast: +18.0%
Median Rent: $1,500
As it turns out, the Charlotte real estate market saw a large influx of net positive migration over the course of the last two years. More and more people decided to call Charlotte home because of its relatively low cost of living. In fact, the cost of living in Charlotte is about 5.0% less than the national average, which is one of the primary reasons many people chose to relocate there recently.
In addition to affordability, however, Charlotte boasts many promising real estate market trends. In particular, job opportunities are attracting America’s largest population of buyers: millennials. Home to Bank of America, Wells Fargo, Amazon, LendingTree and more, Charlotte is a great place for first-time homebuyers to settle down, and the local housing sector is reaping the rewards.
Median Home Price: $388,437
1-Year Appreciation Rate: +29.8%
1-Year Appreciation Forecast: +17.5%
Median Rent: $1,406
The popularity of the Phoenix real estate market is the direct result of its ability to attract buyers of every age. Already known as a retirement haven, Phoenix has attracted older generations in search of lower costs of living, dry heat, and an abundance of golf courses. Still, many may be surprised to hear that Phoenix's growing technology sector is beginning to attract younger generations from all over the country. Not unlike every other city that made the list, Phoenix is attracting anyone and everyone who is seeking affordability. As a result, builders have been working hard to bring supply back up to pace with demand.
Of course, the influx of buyers has increased home values year over year. Phoenix has seen many home values increase as much as six figures, easily making it one of the hottest cities in the U.S real estate market. That said, local real estate market trends are expected to continue to attract buyers of every age. Therein lies the reason real estate in Phoenix remains so attractive: the area has something for everyone at an affordable price.
Median Home Price: $425,130
1-Year Appreciation Rate: +29.6%
1-Year Appreciation Forecast: +17.4%
Median Rent: $1,634
Not unlike every other metro on this list, Nashville has become increasingly attractive over the course of the pandemic because of a very healthy job sector. For more than a couple of years now, in fact, the Nashville real estate market has benefited from some of the country’s fastest job and economic growth. Thanks–in large part–to the healthcare, tourism, music and manufacturing industries, Nashville has one of the strongest job markets in the country. Employment opportunities have paved the way for Nashville to create strong economic tailwinds.
Nashville’s latest real estate market trends have resulted in significant price increases. Last year, Nashville saw the fourth largest median-price increases in metro areas with a population of at least 1 million, trailing only Boston, Phoenix and Austin. Perhaps even more importantly, demand remained intact, which has made Nashville one of the hottest destinations in the U.S. real estate market.
Median Home Price: $437,176
1-Year Appreciation Rate: +31.0%
1-Year Appreciation Forecast: +19.4%
Median Rent: $1,470
Median Home Prices 2022
The median home price in the U.S. real estate market has enjoyed historical appreciation rates for the better part of a decade. In the second quarter of 2012, housing market prices bottomed out at around $162,000. Since then, real estate market trends pushed the median home value in the United States up for ten consecutive years, to the tune of 108.5%. Today, the median home value in the U.S. real estate market is now $344,141.
While the median home value has been increasing for quite some time, the most significant gains have occurred over the last two years. New market indicators onset by the pandemic have created an environment conducive to rapid appreciation rates. In just 24 months, the average value of homes in the United States jumped 36.0%.
The first domino fell when the Fed decided to combat the fear and uncertainty onset by the pandemic with lower interest rates. Borrowing costs dropped to their lowest point ever during the pandemic, and buyers noticed. Fueled by government stimuli, pent-up demand, and the lowest interest rates anyone had ever seen, buyers came out in droves. Nonetheless, demand quickly turned into competition, and inventory levels couldn't keep pace with the influx of buyers. In a matter of weeks, sellers were receiving multiple offers on their homes and forced to increase housing market prices accordingly.
In 2022 interest rates are expected to rise several more times, fueling more demand before borrowing costs increase too much. Demand has turned into competition, and indicators in each of the country's four major regions reflected the increase in activity:
Midwest: Active listings increased 5.8% from the previous year, median listing prices increased 6.5% year over year, and listings lasted on the market 4 days less than this time last year
Northeast: Active listings dropped 1.1% from the previous year, median listing prices increased 6.1% year over year, and listings lasted on the market 6 days less than this time last year
South: Active listings increased 18.3% from the previous year, median listing prices increased 18.5% year over year, and listings lasted on the market 7 days less than this time last year
West: Active listings increased 33.6% from the previous year, median listing prices increased 14.5% year over year, and listings lasted on the market 6 days less han this time last year
Prices rose everywhere, as demand greatly outweighed supply. Subsequently, more people could save money throughout the pandemic thanks to government stimuli and less spending.
The cost of homeownership has risen dramatically in a short period, which begs the question: Will housing market prices go down in 2022? The answer is most likely a resounding "no." Today's market leans too heavily in favor of sellers for prices to drop anytime soon. It's fair to assume prices will increase by as much as 11.6% in the coming year. Not only that, but prices will continue to increase as long as demand dramatically outweighs supply. Inventory is on the way, but it won't get here anytime soon, so there's a good chance the U.S. real estate market still has a lot of room to run up.
Median Rent Prices In 2022
The median rent price in the United States is somewhere in the neighborhood of $1,343. With a few exceptions, rents have tested new highs each month for the better part of two years. In the event current real estate trends continue on their path, it is safe to assume rents will keep increasing for the foreseeable future. Following the latest increases, the average rent across the United States is now 20.2% higher than it was at the start of the pandemic. Perhaps even more importantly, rental rates across the country are now precisely where analysts predicted them to be before the pandemic even happened.
At the start of the pandemic, rental prices fell as more people quarantined and followed government-mandated "shelter-in-place" orders. Rental prices bottomed out towards the end of 2020 but have increased almost every month since. It is important to note that the median rent in the United States hasn't only grown for more than two years but that the rate of growth is the fastest on record. To understand why rental rates have increased at such a rapid rate, it's essential to understand the correlation they share with home prices.
Housing market prices have increased for 10 consecutive years (every year since they bottomed out during the Great Recession). However, the pandemic set several events in motion that accelerated appreciation rates over the last year. In particular, quarantine orders prevented national home builders from obtaining building permits and adding to the nation's already insufficient inventory levels. At the same time, homeowners pulled listings from the market due to the fear and uncertainty onset by COVID-19. As a result, the U.S. housing market doesn't have enough inventory on the books and real estate market trends are posing as headwinds for renters.
In conjunction with pent-up demand, government stimuli, and historically low interest rates, the lack of supply created a seller's market, the likes of which we have never seen before. Simply put, there aren't nearly enough homes to satiate demand, and homeowners have increased asking prices based on the level of competition their listings have been receiving.
Therein lies the single greatest catalyst for today's rising rental prices: The unique combination of high home prices and insufficient inventory levels has relegated many would-be buyers to the rental pool (even those who can afford to buy have been forced to remain renters throughout 2022). As a result, demand for rentals has increased dramatically, and landlords have increased rents all across the U.S. housing market.
Despite broad increases on a national level, data points suggest a significant regional variation. While affordable, mid-size markets tend to see more growth in rental rates, expensive primary cities have seen the most significant pandemic-related declines because of secular work-from-home trends.
As more people were granted the freedom to work from home, larger, more expensive cities experienced a mass exodus. Without the need to live within close proximity to work, more and more people packed up and moved to more affordable cities. In doing so, however, many of the most affordable cities in the country saw their rents increase significantly. Since the start of the pandemic, unique real estate market trends have increased rents the most in the following cities:
U.S. Housing Market Foreclosure Trends & Statistics
According to Attom Data Solutions latest U.S. Foreclosure Market Report, there were "a total of 78,271 U.S. properties with a foreclosure filing during the first quarter of 2022, up 39 percent from the previous quarter and up 132 percent from a year ago."
It is worth noting, however, that the latest year-over-year increase in foreclosures is unique. Foreclosures were artificially suppressed by government-mandated moratoriums and subsequent bills (the CARES Act), which were designed to help homeowners struggling with the financial ramifications of COVID-19. The latest real estate market trends suggest foreclosures in the U.S. housing market are returning to normal.
“Foreclosure activity has continued to gradually return to normal levels since the expiration of the government’s moratorium, and the CFPB’s enhanced mortgage servicing guidelines,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “But even with the large year-over-year increase in foreclosure starts and bank repossessions, foreclosure activity is still only running at about 57% of where it was in Q1 2020, the last quarter before the government enacted consumer protection programs due to the pandemic.”
States with the highest distribution of foreclosures (housing market in US Q1):
Illinois: One in every 1,825 housing units with a foreclosure filing
New Jersey: One in every 2,022 housing units with a foreclosure filing
South Carolina: One in every 2,299 housing units with a foreclosure filing
Delaware: One in every 2,579 housing units with a foreclosure filing
Ohio: One in every 2,604 housing units with a foreclosure filing
Metro areas with the highest distribution of foreclosures (housing market in US Q1):
Detroit, MI: One in every 1,547 housing units with a foreclosure filing
Cleveland, OH: One in every 1,659 housing units with a foreclosure filing
Columbia, SC: One in every 1,921 housing units with a foreclosure filing
Trenton, NJ: One in every 2,299 housing units with a foreclosure filing
Lenders began the foreclosure process on 50,759 properties in the first quarter of this year, up 67.0% from the previous month and 180.0% from a year ago. The states with the most foreclosure starts in the first part of 2022 are:
The current state of the U.S. real estate market is directly correlated to the impact of the Coronavirus on the housing sector and the Fed's response to mitigate a disaster. That said, the U.S. housing market is in a much different place than it was two years ago. At the onset of the pandemic, the housing sector was looking more and more likely to break records and usher in a spring selling season unlike any that had come before it.
Instead of realizing one of the most lucrative springs in recent history, however, the U.S. housing market suffered a significant setback. Fear and uncertainty surrounding COVID-19 prevented buyers from touring homes, sellers pulled their listings off the market, and mortgage underwriters closed their doors because of government-mandated "shelter-in-place" orders.
To stimulate the real estate market and prevent a total collapse, the Fed dropped interest rates to their lowest levels ever. The move catalyzed buyers, and pent-up demand encouraged prospective owners to participate in the market. It should be noted, however, that demand quickly turned into competition. The unique convergence of low interest rates increased savings from quarantine, and government stimuli created a feeding frenzy the market wasn't ready for.
In a matter of weeks, demand greatly outweighed supply. Owners were receiving multiple offers and eventually increased their prices accordingly. Over the last year alone, the median home value in the United States increased nearly twenty percent; that's in addition to the decade of increases that preceded the previous 12 months. Simply put, the pandemic created an environment that favored sellers and sent home prices on an upward trajectory that has yet to ease.
The resulting high-price environment forced real estate investors across the country to reevaluate their exit strategies in 2022. Homes are simply too expensive, and profit margins are growing too slim to not at least consider an alternative to the wildly popular rehab exit strategy.
Due to higher acquisition costs, few foreclosures (due to moratoriums), lower profit margins, and even lower borrowing costs, today's investors are increasingly turning to building rental property portfolios. Access to affordable institutional money has enabled today's investors to simultaneously offset higher prices and increase monthly cash flow from properties placed in operation. With interest rates well below three percent, it's entirely likely for investors to pay down mortgages with other people's money and still pocket some profits each month, even in today's high-priced environment.
That is not to say rehabs and flips aren't viable in many markets across the country, but rather that the new U.S. housing market created in the wake of the pandemic is much more conducive to long-term rentals (and should continue to be for the foreseeable future).
U.S. Housing Market 2022 Projections
Forecasting the U.S. real estate market without an inherent degree of error is a fool's errand. No crystal ball can predict U.S. real estate market trends. However, it is entirely possible to read into existing trends and extrapolate data to make an educated guess. That said, it is pretty safe to assume the following U.S. housing market forecast 2022 will come to fruition:
Housing Market Prices Will Continue To Rise: There isn't a single U.S. real estate market forecast that isn't calling for an increase in home prices in 2022. The median home value in the United States has risen for ten consecutive years. Today's median home value is approximately $344,141. Over the last 12 months alone, housing market prices have risen 20.9% due to increasing demand and a lack of supply. Despite recent increases, housing market projections suggest appreciation will persist for the foreseeable future. As long as unemployment continues to improve, rates remain low, and inventory remains tight, prices will rise in conjunction with a seller's market. Moving forward, the median home value in the United States could increase by as much as 11.6%.
Inventory Shortages Will Ease Slightly: The U.S. housing market currently has 740,000 homes for sale, which is well below healthy levels. The county's severely deficient inventory level is the primary reason homes have appreciated so much over the last year. Fortunately, the economy is reopening, and builders can get back to work. As a result, inventory shortages will start to ease. Building permits are already up year to date, and they should continue to increase throughout 2022.
Millennials Will Buy The Most Homes: The U.S. real estate market outlook is strong, and millennials are a big reason why. Millennials have represented the largest share of home buyers for the better part of a decade, and the trend will continue into 2022 and beyond. Today, millennial buyers (ages 22 to 40) make up the majority of all home purchases. Moving forward, as "younger" millennials grow into their careers, it's safe to assume the share of buyers will lean even more heavily in favor of millennials. As a result, expect starter homes to represent a large portion of home sales moving forward.
Interest Rates Will Increase: Interest rates are up year to date. Still, with the average commitment rate on a 30-year fixed-rate mortgage resting somewhere in the neighborhood of 5.23%, borrowing costs remain historically low. Interest rates will remain low for the duration of 2022, but the Fed will increase rates as the economy strengthens. In a recent Fed meeting, Federal Reserve Chairman Jerome Powell reiterated that rates will increase several times to combat inflation.
Secondary Cities Will Receive More Attention: Today's median home value tests new highs each month as appreciation continues to run rampant. Nowhere else are prices more exorbitant than in primary cities like San Francisco and New York. That said, the latest work-from-home movement onset by the pandemic has enabled more people to leave large, expensive metro areas. The exodus out of larger cities will most likely result in an influx of buyers in local secondary cities. If for nothing else, secondary cities allow buyers to take on a lower cost of living while simultaneously avoiding large crowds.
Investors Will Prioritize Rental Properties: While attractive profit margins remain across the country, they are growing harder and harder to find in select cities. As a result, a growing number of investors are expected to trade rehabs and flips for building out rental property portfolios. In addition to shrinking profit margins, historically low interest rates have made it cheaper than ever to borrow institutional money. Lower borrowing costs will simultaneously help investors offset high acquisition costs and increase monthly cash flow from properties placed in operation.
Of the housing market projections 2022 is most likely to realize, none may seem more evident than continued appreciation. However, it is important to note that these projects are just that; a forecast based on deductive reasoning. There is no guarantee any of these trends will come to fruition, but it is essential for investors to at least note the direction the market is heading. Doing so will enable forward-thinking entrepreneurs to be more proactive than reactive, making the difference between a good investor and a great investor.
The U.S. real estate market is better off today than it has been in recent history. While fear and uncertainty remain in the wake of the Coronavirus, it's important to remember that there are many positive indicators on the horizon. In particular, the economy is starting to show signs of life, and the U.S. unemployment rate is on the mend. As things begin to return to normal and the light at the end of the tunnel grows brighter, activity will pick up.
More importantly, builders will be more equipped to handle the influx of demand. With building permits on the rise, it's safe to assume an easement of the inventory crises will happen sooner rather than later. When builders can add to existing inventory sufficiently, the market will become more balanced and work in everyone's favor: buyers, sellers, and investors.
Despite the road ahead, however, the American real estate market boasts countless opportunities for real estate entrepreneurs looking to make a career out of investing. With the right systems in place, there's absolutely no reason anyone shouldn't be able to realize success as an investor in the U.S. housing market.
Have you thought about investing in the U.S. real estate market? If so, what are you waiting for? We would love to know your thoughts on the current state of the American real estate market.
*The information presented is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing provided shall constitute financial, tax, legal, or accounting advice or individually tailored investment advice. This information is for educational purposes only.