The recent historical pattern of recession, recovery and then recession again forever changed the real estate profession. In the current recovery phase, more millennials are deciding to take the leap into homeownership, yet they have different demands than generations past.
While everyone wants the best bang for their housing buck, young adults care about features beyond the price-per-square-foot.
Real estate agents do well to keep current with these trends. Knowing what buyers value most will save you and your clients alike the frustration of viewing unsuitable properties. Keep the following buying and moving trends in mind when helping prospective buyers earn the keys to their dream home.
1. Rising home prices
Despite the economic roller coaster of the past two decades, home prices have risen, but much more slightly than in earlier booms. Rising home prices benefit sellers by putting more money in their pockets, but it also makes it tougher to find qualified buyers.
Decades of wage stagnation have made it difficult for homebuyers to keep up with the rising housing prices. Not only do many millennials find it harder to qualify for a mortgage due to their debt-to-income ratio, but they also experience difficulty in saving a sufficient down payment.
Sellers pressed to pass title quickly should consider sweetening the deal by offering to pay some of the buyers’ closing costs. As sellers care most about getting the largest return rate on their investment, offering to pay closing costs can attract more buyers to the property, increase competition and result in a slightly higher sales price.
2. Mortgage interest changes
Housing professionals predict a slight rise in mortgage interest rates throughout 2019, so those considering buying should put in their offers sooner rather than later. In recent years, interest rates have remained below 5 percent. However, most experts project rates to soon rise higher than that, so locking in a sub-5 percent interest rate now will save money in the long run.
Higher interest rates equate to less purchasing power for first-time homebuyers. This results in many settling for a smaller home than originally intended. As a result, those with the means to invest in larger properties will discover a wealth of luxury homes on the market.
3. High rents and housing shortages
Not everyone wants to tackle the additional responsibilities that come with buying a home. Some lack credit, and others do not meet the debt-to-income ratio required.
Others simply prefer the greater flexibility leasing provides them so they can pick up and move with only 30 days’ notice instead of having the timing of their new adventure hampered by waiting for their home to sell.
Many rapidly expanding metro areas now face soaring rent prices that force lower-income individuals to look farther afield. Although state and local governments have taken some actions in addressing the housing crisis among those who earn little, many still face the reality of living further from the office than they’d like.
This contributes to traffic congestion, so hopefully in 2019 and beyond, more centralized affordable housing units will become available.
4. Exodus from cities
Not all those fleeing cities lack sufficient means to stay. Moving to the suburbs has grown more popular as the economy slowly improves. With a few exceptions, the further in the suburbs prospective homebuyers look, the more home they can afford per their budget. This makes these locations ideal for those hoping to grow their families.
5. Small-city living
The migration of more people away from urban areas hasn’t ceased demand for amenities such as shops, restaurants and entertainment venues that don’t require a commute of an hour or more.
As a result, many suburbs have morphed into small cities with a mix of commercial and residential properties. Such areas offer big-city conveniences while retaining the lower, more desirable cost of living when compared with the price of a downtown penthouse.
Many find that small cities like Greeley, Colorado, and South Orange, New Jersey, allow for reasonable proximity to international airports while still maintaining a small-town feel. Often, members of these rapidly growing communities connect initially through social media and go on to form deep friendships with neighbors.
6. Walk scores matter
Today’s generation of young, upwardly mobile professionals possesses a greater environmental consciousness than many baby boomers. Many first-time and experienced buyers alike consider a location’s walk score when choosing a new place to call home.
Ideally, city planners should focus on renovation and expansion projects with environmental concerns in mind. Providing adequate connecting walking and biking paths between residential and commercial neighborhoods makes these locations more attractive to residents interested in sustainability. You can focus on these thriving communities when farming for new clients.
7. Greener construction
In addition to preferring residential areas within easy strolling distance to the market, today’s millennial homebuyers prefer new builds designed with eco-consciousness in mind.
Smart homes feature energy-saving appliances that can communicate and run on schedule. Residents who forgot to turn off the TV before leaving for work can now control such appliances from their smartphones, resulting in energy savings.
The tiny-home movement has caught on particularly in parts of California and other locales plagued with high levels of homelessness. These little structures, consisting of approximately 400 square feet or less, require fewer raw materials to produce and less energy to heat and cool.
Future property trends
Today’s real estate markets continue to rise, and more millennials are now choosing housing locations carefully.
By examining the factors motivating your clients’ moving patterns, you can tailor your marketing techniques to highlight properties’ most desired amenities. Staying up-to-date on the brave new real estate market will help you increase your income while welcoming families home.