Will real estate ever settle down? How to invest in this wild sector in 2022


It’s no secret that real estate has been a dizzying rollercoaster ride in 2021. If you haven’t looked into real estate investing over the last year, here’s a quick recap of what happened:

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The pandemic has completely twisted the home buying process over the past year. Low mortgage rates combined with a lack of inventory combined with a desire to move far from the office (hello, permanent remote work!) have created a turbulent real estate market. Homes have been selling literally within hours of being listed, in some cases for three times the asking price.

Let’s find out how to invest in the real estate sector in 2022.

What happened in 2021 and will that change in 2022?

So can we expect increased prices, low stock levels and fast turnaround? Let’s find out what happened in 2021 and how it might carry over to this year in terms of rising mortgage rates, changing price trends and scarcity.

Rising mortgage rates

The Fed has already promised to fight inflationary fires with up to three rate hikes starting next spring. Its policy rate has been near zero since the pandemic began to help the struggling economy

Freddie Mac cites that the rate on 30-year fixed-rate mortgages rose just 0.3% between January and November 2021, but rates could shoot up 3.5% by the end of 2022. Realtor.com says 30-year fixed-rate mortgage rates will rise to 3.60% by the end of 2022, compared to the current average of 3.30%. However, as you can see, mortgage rates aren’t going to go into double digits (in other words, nothing ridiculous), which is good news for real estate investors.

Changing price trends

Experts predict higher house prices for 2022, although the price development will be more moderate compared to 2021. According to Realtor.com, home sales are expected to rise 2.9% this year.

For industry investors, this means prices will continue to rise, particularly in certain parts of the country. Bidding wars also wreaked havoc on property values ​​- hungry buyers snapped up homes at double and triple the price the homeowners were asking. However, bidding wars could still break out at the beginning of the year.

Better, but still a little tight

Buying real estate may not be easy, but it could be easyhere than last year due to still worrying but easing inventory tightness. Supply chain problems and a labor shortage will ease, though Zillow Research says the shortages will still have homebuyers on the hunt in 2022.

How to invest in the real estate sector

Would you like to invest in the real estate sector without actually having to install toilets or paint walls? (You know there are easier ways to make money.)

Try your luck at REITs

Real Estate Investment Trusts (REITs) own and invest in real estate. They allow you to buy shares in commercial real estate portfolios and make money from them without having to buy or manage the property. You can buy publicly traded REITs directly or through mutual funds and ETFs. Let’s go through a few options to consider.

Annaly Capital Management Inc (NYSE:NLY)

Headquartered in New York City, Annaly Capital Management invests and finances residential and commercial real estate through agency, home construction, commercial and middle market loans and invests in agency mortgage-backed securities. In the third quarter of 2021, Annaly reported GAAP net income of $0.34 per average common share for the quarter, earnings available for distribution of $0.28 per average common share for the quarter, a decrease of $0.02 from previous quarter and an economic rate of return and a tangible economic rate of return of 2.9%. for the quarter.

Annaly Capital Management announced quarterly dividends on its Series F, Series G and Series I preferred stock.

UMH Properties Inc. (NYSE:UMH)

UMH Properties Inc., based in Freehold, New Jersey, owns and operates manufactured housing communities. (Prefab homes are similar to mobile homes). Due to rising house prices and higher rents, providers of lower-priced housing such as UMH Properties can add some momentum to your portfolio.

UMH Properties also leases prefab land to private prefab owners. UMH owns approximately 127 congregations, primarily in New York, New Jersey, Pennsylvania and Ohio.

The Company reported total revenue of $48 million for the quarter ended September 30, 2021, compared to $43.1 million in 2020, an increase of 11%. Net loss attributable to common shareholders for the quarter ended September 30, 2021 was $3.4 million, or $0.07 per diluted share, compared to $12.7 million, or $0.31 per diluted share at the same time in 2020, along with a dividend yield of 3.10%.

Essential Properties Realty Trust (NYSE:EPRT)

Essential Properties Realty Trust Inc., headquartered in Princeton, New Jersey, acquires, owns and manages single-tenant properties on long-term net leases to mid-market companies such as Captain D’s, Art Van Furniture, Mister Car Wash, Zips Car Wash, AMC Theaters, Perkins, 84 Lumber, Mirabito, Ruby Tuesday and White Oak Station.

Revenue is forecast to grow 19.76% per year, and revenue is up 40.8% over the past year. Directors declared a quarterly cash dividend of $0.26 per common share for the fourth quarter of 2021. On an annualized basis, this dividend of $1.04 per common share represents an increase of $0.04 per share over the previous annualized dividend.


Crowdfunding companies pool smaller amounts of money and investors can take advantage of this investment method by investing as little as tens of dollars like Fundrise. The company charges an annual advisory fee of 0.15% and an additional annual wealth management fee of 0.85%.

RealtyMogul offers funds focused on growth or generating income from commercial real estate debt for those looking to move beyond investment strategies focused on stocks or bonds. Fees include a 0.5% annual service fee and a 1% annual asset management fee based on the REIT’s total equity value.

Yieldstreet trades in real estate debt and equity and other industries. The minimum investment is $500 and the fund charges an annual fee of 0.5% and a management fee of 1%.

Look at the trends

Before you get excited about investing in real estate, analyze the broader market and consider other alternatives like REITs and crowdfunding. However, be mindful of your service and management fees — these can get you as much as brokerage fees (for regular investments) and property taxes and homeowners insurance (for tangible properties).


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