Real Estate Trends: What You Need to Know

If you are familiar with the real estate market, you will understand that the market is always changing. As a result of this, the market experiences both good and bad times based on several factors. Therefore, whether you are a buyer, seller, real estate agent, or any other person involved in the real estate market, you should realize that certain trends are associated with the market.

As expected, the trends change regularly and, as such, you should keep yourself abreast of the latest ones. Let’s show you the real estate trends that you need to know at this moment.

1. Home prices are increasing at a slow pace

The previous years showed a steady increase in home prices. While the prices grew by 5% in 2018, the growth rate reduced to 3.3% in 2019. Due to the various challenges that we are dealing with in 2020, it has been projected the rise in home prices will be only 2.8%. Hence, the increase will be slower than in previous years.

While the projections are showing a steady and slow increase over the next few years, it is unlikely that there will be any rapid growth that could discourage many interested buyers. This is good news for buyers as this trend means that homebuying is still within the reach of many of them.

For sellers, the story is quite different. Foremost, the steady increase means that they can still get more profit for their properties. Nevertheless, a lot of buyers struggle with current home prices; thus, a further increase will make it difficult for them to buy properties. Resultantly, sellers may not get lots of offers for their properties. This will make the competition tougher for the sellers and only properties with the best offer will continue to sell.

2. Most of the home buyers are still millennials

Let’s focus on who the homebuyers are. Like in the previous years, the majority of people buying homes are still millennials. In 2019, 37% of all homebuyers fall into this category. Notably, millennials are individuals that are born between 1980 and 1998.

It is worthwhile to understand that many millennials have a unique taste in the kind of homes that they buy. Generally, they are internet-savvy people; hence, they usually start their search for properties online. According to a survey, over 80% of these millennials found their homes online. Therefore, sellers must ensure that they list their properties online and use cool videos and photos that can help buyers have an idea of what the properties look like before in-person inspections.

For millennial home buyers, the sizes of their homes are not as important as the features of the properties. Most of them consider the commuting costs, location, and amenities within the neighborhoods. Other popular features that millennials want in their homes include hardwood front exterior, garage store, laundry rooms, etc. Additionally, many of them are looking for properties with home office spaces as some of them tend to favor working from homes.

If you are a millennial buyer, this trend can influence your home buying, so be careful when buying a home. Firstly, you should know the kind of home that you want. Then take the time to check the prices of various homes before buying anyone. Also, you need to look at their features and be certain they have what you want.

3. The homebuying competition will reduce

As stated earlier, many interested buyers are still not financially capable of buying the kinds of homes that they want. This issue is related to the fact that most of the new listings will include only mid- or higher-end properties. While this means that some homeowners will not be able to buy properties, the ones that can afford the homes will not have to deal with much competition.

4. Mortgage interest rates are reducing

Since 2019, we have been experiencing a steady reduction in mortgage interest rates. For the majority of loan types, the rates have fallen below 4%. This year, many economists have suggested that the interest rates will fall to as low as 3.2% for any 15-year mortgage whereas a 30-year mortgage will have an interest rate of about 3.7%.

However, this may not be as straightforward and easy as projected. This is because trade wars, tariffs, and other factors may lead to an increase in the interest rates. So, homebuyers have to be careful and choose mortgage option that is the best for them. Also, they should have a solid plan for repayment of their loan before obtaining it to buy a home.

If the projection for interest rates is true, many buyers will be interested in buying homes. Therefore, home sellers can expect more sales. However, if the reverse is the case for the interest rates, houses may stay longer in the market as the number of interested buyers reduces.

In a nutshell, acquaint yourself with these trends if you are interested in investing your time, money, or other resources in the real estate market.