Marc Jaffe of Indianapolis is an investor in real estate and helps others explore the integration of real estate assets into their investment portfolios. In the article below, Indianapolis investor Marc Jaffe explains the real estate investment trends shaping Indianapolis and beyond.
You don’t need to gaze into a crystal ball to get a clear idea of what’s in store this year for the real estate industry.
Look no further than Indianapolis, Indiana.
Marc Jaffee Indianapolis investor says that expected real estate trends in the capital city reflect industry movement this year across the country. For starter, Indianapolis real estate broke records in 2021, like a large majority of major metro areas in the United States.
The median sales price for a home in Marion County, home to Indianapolis increased over 18% compared to the previous year. Marc Jaffe of Indianapolis says that was mostly driven by low inventory. On average there was just 1 month of housing inventory available, a drop of 23%, but the number of new listings rose nearly 9%.
Translation: It was a heavy seller’s market.
Marc Jaffe of Indianapolis says investment properties have grown in popularity and appreciation rates of real estate have grown 56% over the past 10 years. There is high demand for Indianapolis’ rental market, another trend that mirrors the rest of the country. A four-bedroom apartment in Indianapolis goes for an average of $1,800, a 24% increase over 2021.
Compared to a year ago, Marc Jaffe of Indianapolis says the typical value of an Indianapolis home is up over 17% to $192,802. One big trend for 2022 is that sales prices in the city are expected to rise 12.5% this year, says Zillow.
Even higher prices are just one of many trends in real estate that should define 2022; Realtor.com expects the average sales for a home in America to rise 3% in 2022. Here’s what else to expect.
Mortgage Rates Will Still Be Very Low
Despite the lack of inventory, Marc Jaffe of Indianapolis explains that real estate mortgage rates have held consistently low over the past five years. That trend will continue. Most mortgage professionals expect rates to increase from the current 3.5% rate possibly only slightly.
And even if rates do increase, they will still likely be at historic lows if rates fall between 3.75% and 4.25% in 2022.
Climate Change Will Impact Real Estate Decisions
Major environmental changes — record heat, many catastrophic wildfires, extensive drought — will be on the minds of real estate investors and homeowners in 2022.
According to an Emerging Trends Survey, 82% of respondents say they will consider environmental factors when making property decisions this year. Indianapolis investor Marc Jaffe says that the construction industry is more likely to consider energy efficiency in their commercial and home real estate offerings.
Inflation Will Be the Wild Card
Marc Jaffe of Indianapolis says as inflation continues to rise in the United States without a clear end in sight, it will have an impact on real estate trends this year. The level of impact is unknown. Inflation rose nearly 7% between November 2021 and November 2022, the fastest rate since 1982.
Supply chains are affected and that affects real estate construction. However, higher wages seem to be compensating for the uncertainness a bit and the real estate market overall remains unaffected.
COVID-19 Will Change Demand
The COVID-19 pandemic normalized working from home for most Americans, and even more workers in the United States quit their jobs (just 4.2 million quit in September 2021 alone). Marc Jaffe of Indianapolis reports that many are using the pandemic to refocus their lives, move to new areas, and look for fully remote jobs.
Improved Lifestyle Will Be High on Buyers’ Lists
Though such a migration has been happening before the pandemic, more people are moving away from some of the largest economic centers of the country and into areas with a relatively lower cost of living, including Phoenix, Charlotte, and Denver.
The option to work from home is only encouraging more people to exit the extremely expensive New York City, Los Angeles, and San Francisco housing markets according to Marc Jaffe, Indianapolis investor.
Industrial Properties Will Be on Many Wish Lists
People have been also rapidly moving away from brick-and-motor shopping in favor of e-commerce behemoths like Amazon. One big result is the rise of interest in industrial properties, including warehouses for online retailers to store and ship goods.
Marc Jaffe of Indianapolis reports that as more shift to online sales, more industrial properties are needed to avoid long shipping times and higher consumer and business costs.
More Mainstream Interest in Commercial Real Estate Investing
Marc Jaffe of Indianapolis says it used to be a fact that only specialized industry investors took an interest in commercial real estate. Now, it’s going majorly mainstream, with a larger number of trading platforms that make real estate investing and the stock market more accessible to the average investor.
Less cash is even required to make investments in real estate, especially if it’s through a crowdfunding platform. For just a few shares, the average person can now call themselves a commercial real estate investor.