With record-low housing inventory and millennials entering the home-buying phase of life, it’s definitely a seller’s market. But what do buyers and sellers need to know to make the most of this time? Here are the top 5 trends impacting the real estate market right now.
1. Millennials Are Moving Up (and Moving Out)
Now that millennials are gaining more stable employment and settling into adulthood, many of them are entering the real estate market. This is the biggest trend influencing today’s real estate market.
Current estimates suggest that millennials account for upwards of 40% of home buyers this year. This is a significant figure, especially since the market for starter homes, in particular, is quite limited.
2. Go West!
Because of the growing competition for real estate in metropolitan areas, many buyers are looking westward. In particular, the Midwest is becoming more attractive to millennial home buyers.
Homes for sale are often cheaper in this part of the country, making them more appealing to first-time buyers. Midwestern towns near universities are also seeing higher demand, possibly from recent graduates.
3. Low-Interest Rates Are Spurring Purchases
The high demand and limited supply of houses have driven up prices in recent years. Low-interest rates have further fueled higher prices.
While we can probably expect the low-interest rates to remain stable for some time, eventually they will rise.
It’s expected that interest rates will grow modestly over time to prevent another major recession. But as the numbers increase, prices will likely decrease along with demand.
Many people are rushing to buy houses now to lock in lower rates while they can. Once those rates rise, it’s expected that the number of interested buyers will drop off.
4. Open Houses Are Becoming Obsolete
In such a competitive market, even above-asking-price offers aren’t always making the cut.
There are simply too many buyers and too few houses.
One strategy that has been adopted by about one-third of home buyers in the last year is making an offer sight-unseen.
Once a buyer is made aware of a specific property, rather than wait for an open house or private showing, they reach out to the realtor directly to submit an offer.
There are obvious benefits and drawbacks to this strategy. While you may get an acceptance ahead of the competition, you don’t know exactly what you’re buying.
It’s always recommended to get a thorough property inspection prior to signing any contracts, and this is one instance where that is especially true.
5. Homeowners Are Reluctant to Leave
For sellers, the current real estate market presents a unique Catch-22.
Though they are likely to get multiple high-priced offers for their homes, it will be more difficult for them to purchase their next house.
This has led many would-be sellers to stay in their homes instead, renovating as necessary and making the most of their current arrangements. In turn, this continues to add to the limited supply of houses that would have been available otherwise.
Navigating the Real Estate Market
While the current market is difficult, to say the least, there are still opportunities to invest.
Even if your dream home is out of reach now, you may be able to find a cheaper option to build equity in the meantime. Finding a property that can provide rental income is another possibility.
This way, you can take advantage of low rates now, and trade up for what you really want later.
Though it’s far from ideal, current real estate trends all highlight the need for flexibility in this market.