The real estate market has been gaining momentum in the last few years, especially during the COVID-19 pandemic. Home values raised, buyer demand soared, and mortgage rates hit record lows.
However, the housing market is constantly changing. Continue to read to find the latest trends in the real estate market.
1. Real Estate Prices Increase
House prices are affected by various factors, including the amount of housing supply (available for purchase) and the local buyer demand. Usually, high demand and low supply lead to an increase in housing prices.
Mortgage rates also influence house prices since they impact demand. When rates are lower, there’s usually more interest in purchasing homes. When rates increase, demand might decrease a bit.
At the national level, property prices have been growing for some time. By the end of 2020, the median home price was just below $347K. House costs soared by 11% across 2020 alone.
Meanwhile, in the first quarter of 2021, house prices soared by almost 20% compared to last year.
This increase in property prices is occurring (and likely to continue to rise for quite a while) because there are more buyers than homes available. Yet, some experts predict a change in the real estate housing market in 2022. There will be a higher supply of housing by then, and the situation will be favoring buyers.
2. Less Choice For Buyers
It’s not the easiest time to make a real estate investment, as inventory has been super low. Just so you have an idea, inventory was down by nearly 30% in the first quarter compared to a year before. There just weren’t enough properties available for sale over the year to meet buyer demand.
Low inventory means you have to act quickly when you go house hunting. The best properties will likely be snatched up fast. At the beginning of Spring this year, the majority of houses sold around twenty days faster than past springs. You won’t have much time to be indecisive over your home search.
So, if you still want to find a good property in this slim market, there are some things you should consider. Before you go searching for a house, get preapproved for a mortgage (you’ll be able to purchase it quicker). Also, have an open mind: if the location you want is too competitive, look at less popular neighborhoods. You may find a hidden gem.
3. Rents Are Skyrocketing
If you’re a landlord, it’s time to celebrate. If you’re not, it might be worth making a turnkey property investment to become one.
The point is, the eviction ban is over, and rents are higher than ever. According to Realtor.com, they soared by 11.5% in a year (from August 2020 to August 2021), marking the first double-digit increase on record.
Also, rent costs are pretty high. They’re more expensive than starter homes in several American cities, such as Birmingham (AL), Tulsa (OK), and Memphis (TN). If you live in one of these places, it’s undoubtedly worth investing in real estate.
The average monthly rent reached $1.633, an increase of $169 a month. Two-bedroom apartments saw the biggest boost, at 12.3% over the year. Those rents now cost just under $1.830 per month.
So, if you have a spare house, it might be time to hire someone for rental property management and start making extra cash with a new tenant.
Real Estate Market
It’s always worth considering the situation of the real estate market before making significant investment decisions. Now that you’re aware of the current trends, you know what you’re stepping into.
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