Brian and David Wickert of Accunet Mortgage walk you through the 9 Real Estate Trends affecting today’s market, and your next home purchase.
This week on the Accunet Radio Show:
Brian and David Wickert discuss the 9 Real Estate Trends most likely to impact our local housing market, as presented by the National Association of Realtors‘ Vice President of Demographics and Insights. Learn what affects the sale or purchase of your home, and what you can do to make these trends work for you.
This week’s highlights
- If you’ve been tuning in to the show, you know we’re in a pretty hot local market. But we’re not the only ones; At last count, there are 400,000 more households than constructed units per year.
- Keeping up with modern marriage trends, the average age of first-time homebuyers is increasing. The median age used to be 29, but these days, the average age of a first-time homebuyer is 32.
- Despite the evolving market, 9/10 renters consider homeownership part of the American dream, and 8/10 people surveyed plan to own a home in the future.
The spring market is in full swing! Don’t go out there with a flimsy bank approval. We’re heping home shoppers become home owners with our Rock Solid Approval program.
9 Real Estate Trends Affecting the 2019 (and Future) Market
Recently, the National Association of Realtors had their brokers summit in Austin, Texas. There were some great presentations, including one from the NAR’s Vice President of Demographics and Behavioral Insights. In it, she explains which trends to keep our eyes on, and how they affect homebuyers like you. Here are the highlights.
Trend #1: Lack of affordable housing inventory
Every year, 1.6 million new households are formed. A new household is defined as a person (or persons) moving into an independent household for the first time. So, for example, a student moving out of their parents’ house nets 1 new household. Conversely, those in assisted living, nursing homes and prisons are not part of the household survey — so, an older gentleman moving into an assisted living community is a net household loss of 1.
In 2018, 1.3 million new residential housing units (houses, apartments, etc.) were built, according to the US Census Bureau.
- ~66% are single-family detached homes
- ~33% are apartment buildings of 5 or more units
- A very, very small percentage are 2-4 unit buildings
According to the NAR, about 100,000 residential housing units fall out of stock every year, whether they were torn down, declared uninhabitable or otherwise declared void as a residence. So, there’s a gap: 400,000 more households (remember, that’s a person or persons in their own home) than constructed units per year.
So, where are these people living?
That’s what we asked, too. Where are all the tent cities?
The answer is pretty interesting. The turnover rate on apartments is high, and apartment vacancy rates absorb the shortage in constructed units. This creates higher rental prices (up 44% since 2009!), but keeps the cycle of residents moving.
- At the end of the recession, the vacancy rate was 11%
- In 2019, the vacancy rate is down to 7%
In the last 15 months alone, rental prices have gone up 10%. The median average rent for a vacant apartment used to be $900 — now it’s $1,060. And it’s not just apartment buildings; home prices in the metro Milwaukee area are up 6.2% since last year, showing the upward pressure on both home prices and affordable rent.
Trend #2: Unmarried buyers are increasing, and repeat buyers are older
The average age of repeat buyers is at an all-time high of 55, having steadily climbed from the 1981 average of 36. Why is that? Here are our guesses:
- “Repeat” might have an ambiguous definition — does it only mean second home purchase? Third? Fourth?
- The length of time people live in one home is rising.
- Baby boomers are starting to downsize.
The median age of first-time homebuyers has also risen over the last 40 years: in the 80s, the average age was 29. Now, the median age of a first-time buyer is 32.
- Married couples make up only 54% of first-time buyers (for context, they made up 75% in the 80s market)
- Single women make up 18% of first-time buyers
- Unmarried couples make up 16% of first-time buyers
- Unmarried men make up 10% of first-time buyers
- Cohabitation (living with a roommate) makes up 2% of first-time buyers
Trend #3: Increased need for caregiving and pet space
More and more, we hear people saying, “I need a house with an extra room, so Mom can move in, and I can take care of her,” or, “I need a house with a lot of green space for my dog.” In keeping with the rising number of couples choosing to adopt pets rather than have children, the current lifetime birthrate for American women is only 1.7 — meaning there’s not as much need for child-friendly households. And, for the first time in a long time, the need for green space is outweighing the need for a quality school district.
Trend #4: The bank of Mom and Dad
A lot, and we mean a lot, of our clients need help making a down payment. It’s totally normal — in fact, 33% of buyers receive down payment help from family or friends.
The biggest misconception in this is the mystified gift tax. People think that, if you give more than $15,000 to one person, you’ll suffer consequences; it’s just not true. The US gift amount limit is currently $11,000,000 per person and is soon shifting to $5,000,000.
Income interpretation, and deciding what a person earns, and what they’re qualified to use on their mortgage, isn’t always black and white.
Recently, David helped a first-time homebuyer couple get a condo in Chicago. He did this by maximizing their income, which allowed them to borrow more money. The more qualifying income you have, the less you need to put down for a home.
The easiest way to use a gift as a down payment: Give the gift at closing, and follow the wiring instructions from the title company.
Trend #5: Home tenure is on the rise
Rounding out the other rising numbers, the tenure of owning a home is also on the rise. Until 2008, the average number of years an owner kept their home was 6. Now, the average homeowner lives in the same house for 9 years before moving on.
Trend #6: Student debt is crushing finances
On our end, we haven’t seen too much evidence of this trend; Student loans aren’t really stopping people from buying homes. The only time this really seems to impact a home purchasing decision is when the buyer has a lot of loan debt to consider — usually over $100,000.
Trend #7: Buyer expectations have risen
When people buy homes, they tend to have a premeditated notion of what the process will be like. This is known as buyer expectation. The NAR has seen a marked increase in buyer expectations, and have dubbed it the “TV effect,” since many buyers borrow these expectations from fanciful (and unrealistic) TV programs.
Trend #8: Home sustainability is gaining popularity.
Trend #9: Agent use is high.
Buying a home without an agent is difficult, and only getting harder. In the mid-90s, 20% of homes were listed as For Sale by Owner. In 2019, only 7% of listed homes are For Sale By Owner — noting a definite change in the role agents play in the home buying process.[elementor-template id=”10109″]
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