As the world plans to reopen, this spring is shaping up to be an interesting time for residential real estate. Here’s what some experts predict.
This season’s housing market is a weird one. A variety of economic factors and the pandemic combined into a perfect storm of trends that experts call unprecedented.
Read on to learn what experts are saying and what to expect in this spring’s residential market.
High Demand, Low Supply
People looking to buy houses in this market should brace themselves for stiff competition. Experts say inventory is lower than ever this spring, in part caused by the pandemic and severe weather conditions the previous winter. There may be other factors at play such as a rise in couples breaking up and moving apart, or Millennials moving out of their family homes. On the other hand, there are half as many homes on the market this season as there were at this time last year.
This is actually good news for sellers. Not only are market prices on the rise with no sign of stopping (more on that in a moment), home sales are moving faster. Just over half of the homes that hit the market go under contract within a week. Last year, that number was at 44%.
For buyers, there could be some relief later in the year. With more people being vaccinated, people are warming up to the idea of moving again. A poll of Zillow users found that most surveyed would be more likely to move once the vaccine rolls out more. This would increase the supply of homes – but it would also increase demand.
If you’re in the market for a new property, there are a few platforms that use unique data analysis to find properties likely to sell but haven’t yet hit the market. Get the jump on these likely sellers and gain an advantage in this extra competitive market.
Mortgage Goes Up, Rent Goes Down
Home prices are on the rise due in part to this seller’s market. But mortgage interest rates are also climbing. This affects the affordability of homeownership and pushes that goal further out of reach for many people, especially in the wake of record unemployment rates the previous year.
Meanwhile, rents are on the decline. The average rent in several cities dropped sharply as the pandemic raged on. When stay-at-home orders went out and nightlife and inner-city amenities closed down, the value of living in an apartment dropped. Throw in the declines in immigration and college move-ins, and it makes for reduced competition for apartment living.
But this still doesn’t mean rent is cheap, and many households who aspire for homeownership may see that goal pushed back even further. Some investors are taking this opportunity to look into types of investment properties, such as multi-family homes and mobile home parks. Others are considering moving their focus to a new location completely – read on for more details.
More Technology In The Mix
The popularity of apps like Realtor.com, Zillow, and others means more people are ditching traditional realtor relationships in favor of do-it-yourself home buying. Capabilities range from browsing home listings online to doing virtual tours. Some are even moving the entire purchasing process online, with services doubling as virtual buyers and sellers.
The pandemic moved much of the tedious processes of home-buying to the cloud, such as virtual home tours and online closings. These trends are likely to persist as the pandemic conditions recede, due to convenience and many households moving extended distances. Other services aim to replace a realtor completely. Services like Zillow now buy and resell homes, making the process of buying a home completely digital. This can mean less hassle for you. But, it can also mean additional service fees on top of closing costs and commission that hasn’t gone away.
The DIY home buying trend could disrupt potential real estate sales by giving consumers a way to buy and sell properties without the help of a third party. Those buyers who are still stuck at home and may have a side hustle on top of their job may benefit from the reduced hassle in their moving process. But don’t despair. There are still plenty of consumers who prefer a human touch and see the value of involving experts in their real estate endeavors. A house is more often than not one’s single biggest investment. So it’s up to you to show clients how you can get the best value for them.
You can also make these digital changes work in your favor. Certain applications for technologies such as artificial intelligence and automation can be used to make your work run more smoothly. Use predictive analytics to identify promising new properties, or use robotic process automation (RPA) to automate routine tasks.
Move To 18-Hour Cities
For some people, the vaccine rollout is making the idea of close interactions and heavy metropolitan areas more palatable. But for others, the work-from-home lifestyle has its benefits and there’s little need to live so close to their jobs. As a result, experts are seeing more emigration from traditionally “24-hour cities” like New York, Chicago, and Los Angeles in favor of so-called “18-hour cities.”
These 18-hour cities are mid-sized with significantly lower costs of living, have a reduced presence on the national stage, and show a lot of potential for growth. People who move here enjoy the amenities that come with city life without the hustle and bustle of the nation’s largest cities. Entrepreneurs and investors see the movement as well, so expect more growth within the near future.
But not everyone who moves to an 18-hour city works from home. Many people still work in industries that make remote work difficult or even impossible, so commuting is still a concern. 18-hour cities hold the possibility of decent work and reasonable housing costs without an extended commute from the suburbs.
Investors should look to these cities and others for new opportunities for growth:
- Austin, TX
- Charlotte, NC
- Salt Lake City, UT
- Seattle, WA
- Portland, OR
- Hartford, CT
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The platform includes a “likely seller” algorithm that constantly analyzes market trends using predictive analytics and identifies properties that are likely to sell in the next 12 months—before they hit the market. If you’re looking to buy a house in this market, the likely seller algorithm will give you a distinct advantage over your competition.
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