Home purchasing will always be a vital aspect of our economy. However, the process of buying a home changes all the time. With shifts in buyer demographics, popular locations, technologies, and more, buyers and sellers alike must keep up-to-date on the latest trends — especially if you want to sell your home to younger buyers. In this evolving market, it’s essential to be aware of the following changes.
The Shift Away from Cities
The coronavirus pandemic led to massive changes in a wide variety of markets. This includes real estate. With the public shutdowns, the things that made cities so desirable largely went out the window. The bustling nightlife and office networking opportunities of more urban areas disappeared practically overnight. Now, remote work and social distancing have redefined the way we interact with where we live and work.
As a result, the real estate market has shifted into new territory. No longer are urban hubs as desirable as they once were. Closed sales of Manhattan apartments, for example, have fallen by as much as 37%, year-over-year. Meanwhile, rent prices in San Francisco fell 31%, as people are leaving the city in droves thanks to new remote work opportunities.
Alternatively, mid-sized housing markets in more rural areas like Boise, Idaho, are taking off. Boise, for example, experienced an 11.8% home value increase from last year. With workers now able to work remotely, new geographic opportunities are available for home buyers. This has largely moved the scale of demand onto more rural markets where growth is skyrocketing.
The shift away from cities is an important signifier because it means home buyers are no longer limiting themselves to traditional markets. As a result, roles like real estate agents may no longer be defined and limited to their direct local region.
Enhanced technology and the accessibility of that technology make this geographically open-market more possible.
The Digital Trend
A reported 81% of older Millennials found their homes through a mobile app. This statistic demonstrates how vital technology is to the current home buying process. In the face of the pandemic, the shift towards virtual dependency in real estate has only quickened. Now, nearly every aspect of the home-buying process has some kind of virtual element.
Real estate agents are reporting increased use of features like virtual tours that allow prospective buyers to view a property — sometimes even purchase it — without even physically being on location. This is a trend that may have previously seemed absurd, but with health risks and high competition, the digitization of real estate makes more sense than ever before.
Smartphones simply make all kinds of commerce easier. From searching for a property to securing a mortgage, mobile applications are converging to create a highly digital home purchasing experience that is constantly evolving.
Stakeholders in the real estate game must keep abreast of these new digital trends and make use of them in their own processes for more competitive results. This includes paying attention to demographic changes.
Evolving Demographics and Processes
The largely global, highly evolving marketplace means you can’t expect demographics to stay the same for long. With the digital shift comes evolving groups of home buyers and new methods for searching for and purchasing a new home. Generational and regional differences only add to the complexity of the market changes.
The post-COVID-19 real estate market is now made up of millennial home buyers looking for what is often their first home. They seek to establish financial stability through real estate investment and will jump at the right opportunity.
With millennial and even Gen Z now in the market for purchasing homes, a natural shift must take place in the ways we conduct real estate business. For example, younger generations have grown up with substantial access to technology and the convenience it brings. These demographics expect technological integration, a seamless process, and accessible virtual technology like video and 360-degree tours.
Additionally, these younger homebuyers bring with them additional expectations for the home buying process. In browsing for homes on their mobiles devices, an increasing number of prospective purchases want to do the following from their phone:
- Read general information about a home
- Get directions to a home
- Compare prices
- Compare features
- Search listings
Along with these mobile functions, market conditions are changing and fueling an evolved home buying process. For instance, low Federal Reserve interest rates have put mortgage interest at all-time lows. Prospective homebuyers are battling to get in on this opportunity, but to protect their own businesses, mortgage lenders have to be more conservative with their lending processes. This means buyers need to secure good credit and make high offers to secure a home in what is increasingly a highly competitive housing market.
While this might make home buying more difficult for a portion of the population, there are steps prospective homebuyers can take to increase their potential to secure a mortgage even after bankruptcy. These steps include repairing your credit, saving for the future, and shopping for mortgage rates across the broad and digital economy. You can find all kinds of mortgage products on smartphone apps and online services that can help you get the best deal no matter your situation.
A New Housing Market
In the new housing market, a younger generation of buyers’ looks to own a home facing digital and market shifts. This has opened up the real estate economy to vast technological potential. Right now, an estimated 42% of Americans now work from home and can set their sights on new locales in diverse and growing areas of the country.
With enhanced barriers to entry through tighter mortgage qualifications, however, many of these would-be home buyers are also choosing to rent for longer. Sometimes, this is a better option that can help these buyers improve credit and build savings while they wait for a better opportunity. At the same time, this opens up the door for real estate investors to make a long-term, passive profit off rental properties.
With these abundant opportunities in the evolved real estate market, all real estate stakeholders must explore their own opportunities to make the most of the new reality. Consider shifting processes and demographics in the changing digital marketplace to determine how the new housing market can best work for you.
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