Whether you’re buying, selling, or staying in your home for now, keeping in touch with the trends of real estate is critical to your current and future decision about moving. Here are three trends making headlines right now with a deeper look into what they mean for sellers vs. buyers.
Trend #1: Home Prices Continue to Slowly Rise
Despite the health crisis, home prices continue to rise. The average home sold in Greater Cincinnati (April 2020) was $222,430, up 4.9% from this time last year. While the health crisis affected number of sales in March and April, it did not result in lower pricing as inventory remains at a record low.
Sellers: It’s likely you can make a healthy profit right now, especially if you’re at or below the $300-400,000 tier. Remember, with higher prices, more folks are priced out of the buying at this time. You can still do well as long as your home is move-in ready and you stand out among the competition of similar style homes. If you get low-balled, have the patience to wait for the right offer.
Buyers: In a seller’s market, you absolutely must know what you can afford. Crunch the numbers, work with a loan officer, and be realistic about setting a budget. It’s not just about a monthly mortgage. Remember to account for maintenance costs as well. Some options to consider to increase affordability: 1) Sacrifice some things on your want list and stick with the must-haves, and 2) Expand your search to other locations. You might find that getting more of what you want in a neighborhood a few miles further is preferable to living in the desired location that has less of what you need.
Trend #2: Mortgage Rates Are Still Super Low
Let’s face it, mortgage rates matter when it comes to affordability. The average 30-year fixed rate conventional loan is around 3.33% and the average 15-year fixed rate is around 2.84%. Low rates mean more purchasing power for a new home.
Sellers: Low interest rates means that buyers are motivated to purchase while rates stay low. If we see a slow rise in rates, it might mean your house is on the market a bit longer.
Buyers: Even with low interest rates, stay smart with your money. Avoid loans that cost more in the long term and strap you with a lot of fees.
Trend #3: Millennials Represent the Majority of Home Buyers
Why is it important to know who’s buying the most homes right now? The simple answer is to know your buyer. As of now, 38% of buyers are millennials, those born between 1980-1998. They are internet-savvy and they do their research before leaping into a purchase contract.
Sellers: Virtually all millennial buyers use the internet to scout out homes. A whopping 78% of them found their homes on their smart phones last year. Make the best impression by investing in high quality photos and offer video home tours. Also, highlight convenience and perks over size. This demographic is more about proximity to work, schools, entertainment, and neighborhood quality more than house size. Popular home features they seek are a dedicated laundry room, patio, garage storage, and a walk-in pantry.
Buyers: For married couples looking for 3-bedroom homes in the suburbs, be prepared for a lot of buyer competition. Gain agreement with your spouse on your absolute must-haves. Have an in-depth talk with your Realtor so that he can help you understand the market’s reality and work with your list of needs.
Not Ready to Move? Here’s the Good News
Equity is unlikely to face a decrease this year. Housing and mortgage experts are predicting profitability for sellers at least through 2023. That’s great news if you know moving is likely in the next few years. Continue to monitor what your home is worth and how the neighborhood is doing in sales. There are no obvious signs of a real estate crash, even in today’s uncertain world. And finally, note that there’s a buyer out there for your home no matter where you live. Even if you’re home doesn’t fall into the popular locale or is off the beaten path, someone has a reason to choose your home.
Real Estate Term of the Week
Equity The difference between the fair market value of a property and the amount of money you own on the mortgage. To calculate equity, deduct the mortgage value from the fair market value of the property.