Inventory. This one word has a big impact on pretty much every factor of the real estate market.
In the past year, inventory has continued its trend of record low numbers, driving up demand, home prices, and buyer frustration along with it.
But, new data suggests that this winter may see a flurry of new homes for sale. That’s big news for clients who have put off making a move in the last year.
Let’s dive into the four reasons we may see more real estate activity soon and what this means for you and your clients.
There is pent up demand among sellers
For the past 10 years, people have been living in their homes longer than the historical average. Since 2010, the average tenure in a home has been about 10 years. However, we are now seeing that shift.
Plus, new research indicates that homeowners thinking about selling are about to put their homes on the market this winter instead of waiting until the spring.
Of homeowners planning to enter the market in the next year:
- 65% – Have just listed (19%) or plan to list this winter
- 93% – Have already taken steps toward listing their home, including working with an agent (28%)
- 36% – Have researched the value of their home and others in their neighborhood
With all this data, agents should be prepared to help both buyers and sellers navigate another busy winter in 2022.
Homeowners are sitting on record levels of equity
Today’s homeowners are sitting on a whole lot of equity.
According to a recent report, the average homeowner gained about $56,700 in equity over the past year.
That’s a big incentive for many homeowners to make a move into a home that better fits their needs.
Educating your clients on their equity, and the options it gives them to upgrade or downsize their home, might be just the motivation they need to sell their home and buy one that better fits their needs.
Home has taken on a new meaning
There’s no questioning it. Life today looks a lot different than it did in January 2020.
While most of us have spent the better part of the last two years in our homes, it’s made us take a long, hard look at what we really want and need out of our dwellings.
Plus, a recent poll indicates that home has taken on a new meaning for many American homeowners.
According to the study, the top reasons sellers want to move are:
- 33% – They have realized they want different home features
- 37% – They say their home no longer meets their family’s needs
- 32% – They want to move closer to friends and family
- 23% – They are looking for a home office
And with mortgage rates on the rise, experts anticipate sellers may be more inclined to start the search for that perfect home sooner than later.
It is now cheaper to own than rent
Rental prices have been on a steady incline for the last twenty years, and that isn’t expected to change anytime soon.
According to a recent report by Apartmentlist.com:
“Since January of this year, the national median rent has increased by a staggering 16.4 percent. To put that in context, rent growth from January to September averaged just 3.4 percent in the pre-pandemic years from 2017-2019.”
While most renters think that it’s the cheaper option, we have three words for them: fixed-rate mortgage. As rent continues to appreciate (with no end in sight), homeowners can lock in a payment for the next 15-30 years with little change on their monthly amount due.
However, the biggest incentive for renters to buy comes down to equity. For every monthly mortgage payment made, they’re investing into their financial future. And that equity also continues to build over years of home price appreciation.
To put it plainly, whether you’re a renter or a buyer, you’re paying a mortgage. But you definitely have a lot more financial advantages when it’s your own.
