The housing market has been changing at a very fast past these past few months. Due to a large number of Americans losing their jobs and the COVID-19 pandemic, banks have a tight grip on mortgages causing home prices to skyrocket. That means that the pressure is on as far as selecting the right home for you and your family. But there are also a lot of factors outside of your control that you have to keep in mind when looking at real estate.
For one, you should be aware of current market trends but you also need to have some kind of life plan ahead of you. Knowing where you and your family will be 30-years from now will help you make a more solid decision in what kind of home you should be buying than anything else.
Aside from that, we have some seasonal trends that we think that you should be aware of in case you’re thinking about buying soon.
1. Home Prices are Rising
As everyone knows after the COVID-19 pandemic everything went up in price and to make things even worst there’s been a shortage of a large number of supplies. This is probably a bit of bad news for those potential buyers that are holding out in the hopes that home prices will start falling somewhat. There are two major factors working against this: Historically low rates and moderate availability of inventory in the nation’s most desirable locations.
The number of homes in the U.S. listed for sale on Zillow in December was down 7.5% from the previous year and is at the lowest level ever recorded by the company. While that doesn’t mean that millennials should rush into something now that they can’t afford later, it does make the current period a historical opportunity for buyers – as well as sellers.
One trend that many real estate market analysts are watching is the shift in ownership styles for the baby boomer generation who are fleeing larger houses (and colder weather) for warmer climates. This could present a real boon for millennials that need a home to accommodate a growing family without having to turn to new construction, which can often be expensive.
Additionally, since baby boomers are relatively eager sellers, millennials don’t face the pressures of a developer marketing and selling units as luxury and above market rates.
2. Mortgage Rates are Falling
A factor that greatly reduced the willingness of consumers to consider buying a home (and especially for buying money towards that end), the housing market crash of 2008 was a wake-up call for the industry but also a huge education for consumers wary of the vagaries of mortgages and real estate. But the market has largely recovered and rates are going back down to historical lows which means that now it is cheaper than ever for homebuyers to make their dreams come true.
This is a variable that deserves watching, too, as it could change in the coming months or years. Impacted by everything from global markets to the presidential election, buyers cannot rely upon historically low rates continuing indefinitely.
This makes the pressure to buy the “right” house even more intense than ever before according to the Local Records Office. Couple this with a limited selection of the nation’s most desirable areas and you see that buyers could be potentially squeezed if they wait around – but it could just get worse the longer they wait.
Robert Dietz, the chief economist at the National Association of Home Builders (NAHB), says that builders have been grappling with rising costs of land, labor, and building materials, plus a labor shortage of about 300,000 skilled workers.
3. Millennials are taking the Lead as Buyers
Did you know that over one in three home buyers are of the millennial generation? As the leading age group for new homes, sellers have to adapt not only their homes but also the way they market them to this group. For one, millennials love access to things like public transportation and nearby amenities.
This is why you often see an emphasis on listings targeted towards this group that lists nearby features and conveniences instead of raw figures like the size of the property.
Dave Ramsey cites a poll of millennial buyers that found the following features as being the most important, including “laundry room (86%), hardwood front exterior (81%), patio (81%), garage storage (80%), and a walk-in pantry (79%).” Real estate agent Chris Dossman told Kiplinger that, “Although it’s a seller’s market in most cities, now is still a great time to buy a house if you’re looking to snag a low mortgage rate. But homebuyers should be prepared to deal with competing for offers.”
Though buying a home in 2021-22 should be easier than ever before, there are only so many problems that cheap credit can overcome.
The lack of inventory combined with the rising prices in the booming cities across the “sunbelt” and beyond mean that millennials and others are facing a tougher time than ever before when it comes to securing a property that meets their individual needs.
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