LOS ANGELES, CA – When it comes to buying a home, it’s never an easy decision. After all, you’re signing up for a big monthly payment for years and years according to the Local Records Office in Norwalk, CA.
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
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. Kiplinger reports that “…a large cohort of baby boomers are buying and selling, as many boomers downsize for retirement.
Adding to the big squeeze on buyers is a huge housing shortage: 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. The U.S. housing market is facing an undersupply of homes for sale of 3.8 million, which is driving up home prices and putting pressure on housing affordability.” 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 wakeup 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.
As Robert Dietz tells Kiplinger, “After years of sluggish growth, the supply of newly built homes is picking up. 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. But the NAHB projects that 920,000 single-family houses will be built this year—close to the 1 million homes that will have to be constructed annually to pull the nation out of its housing shortage.”
3. Millennials are taking the Lead as Buyers
Did you know that over one in three homebuyers 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.”
Financial website Nerd Wallet also reports that “With acute shortages of homes for sale in so many markets throughout the nation, getting preapproval for a home loan is more important than ever. Cash buyers used to give sellers confidence that a deal would close quickly, but fewer cash buyers are shopping right now. And when houses weren’t in such short supply, buyers didn’t face the pressures of intense seller’s markets.”
Though buying a home in 2020 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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