8 Real Estate Trends You Need to Know

Let’s talk about the current state of the real estate market! Interest rates are at an all-time high, inventory is low, and, depending on who you talk, we’re in a recession. News headlines can sometimes be overwhelming and difficult to decipher. Here’s what you need to know without all the fluff:

1. The sky isn’t falling. Jessica Lautz, Vice President of Research for the National Realtor’s Association states: “I keep hearing people say they’re waiting for prices to drop. But if you look at the data, that’s just not happening right now.” On average, homes for sale are receiving more than 3 offers with about a third of homes selling above the asking price. Foreclosures and short sales remain at historic lows, despite a modest uptick. Thanks to equity, most homeowners will likely have enough money to cover their mortgage even if they face an unexpected life event.
2. Americans are on the move. Over the last year the average buyer moved a median of 50 miles from their previous residence, with a quarter of buyers moving more than 470 miles away. This is a huge change compared to 1981-2021 where the average home buyer moved 10-15 miles. Remote work has played a major role in Americans moving longer distances.
3. Cash buyers are still a force to be reckoned with. The number of cash buyers is significantly higher now than pre-pandemic making up 26% of the marketplace. These investors and property owners with substantial equity are steep competition for first-time homebuyers.
4. Generational dynamics are prevalent. The data shows a cultural shift toward homeownership occurring later in life when compared to past generations. 36 is the current median age of a first-time home buyer. Baby boomers have surpassed millennials as the largest home buying force with 39% of the market share. Younger adults make up 28% of the market.
5. New construction is promising. Existing inventory is still low, resulting in new construction giving buyers more options. Typically, these sales accounted for 10% of the market. Now, however, new home sales are accounting for 20% – a number that is expected to grow.
6. Home prices are unlikely to drop. Lawrence Yun, Chief Economist at the National Association of Realtors, shared that home prices are down 1% this year versus last year, “but overall, I think the decline is over.” In June, the median sales price for an existing home was $410,200 which is the second highest level in over 20 years. In practically every U.S. market, home prices are still higher now than they were a year ago. The National Association of Realtors forecasts a rise of 2.6% in home prices in 2024.
7. Mortgage rates are likely to decline, a little. Mortgage rates are currently around 7%, which affects homeowners’ budgets. The Federal Reserve is expected to make its next decision on short-term interest rates in September, which will affect the direction of long-term borrowing costs. “If the Fed stops raising its short-term rates, and if inflation continues to edge down, the 30-year fixed-rate mortgage could fall near 6% by the end of the year.”
8. There’s more demand than supply. Despite higher interest rates (mortgages can be refinanced once the interest rates decrease), home buying demand is still high. Housing inventory remains low. In the current market, more than 70% of homes are sold within one month. When you find a home you love at a good price, act fast.

Check out the article that prompted this post here.