The real estate industry is always changing, so it’s important to stay on top of any trends that could impact your business. Whether it’s changing consumer tastes, housing prices or employment rates, real estate professionals need to be aware of everything that can affect someone’s decision to buy or sell a home. Homes.com‘s “The State of Real Estate 2014: The Good, Bad and Ugly” infographic illustrates what real estate trends you should be paying attention to and what you can expect to see down the road.
The Good Trends
Despite a slow start to the year, leading economic indicators point toward an improved economy. There was an annual increase of 2.8 percent in personal disposable income (U.S. Bureau of Economic Analysis 2014), which is consistently improving national retail sales. Furthermore, household wealth in the U.S. climbed to the highest levels in five years during the fourth quarter of 2013 (Federal Reserve). The fact that consumers are bringing home more money is helping raise their confidence in the economy.
Housing affordability is strong and home values are improving, but the median home price (290K) is the highest recorded in history (NPR). The good news is that job growth has averaged 189,000 new jobs per month over the past year (Bureau of Labor Statistics). Considering that more and more people are now finding employment opportunities, mortgage delinquencies have dropped to the lowest levels since 2008 (HousingWire). What’s more is that foreclosure filings are 18 percent lower than last year. These are all signs that the increasing income of consumers is helping them feel more confident about being homeowners!
Although home price growth is up 11.3 percent (Standard & Poor’s 2014) and home sales seem to be leveling out, contractor sentiment has improved, according to reports from NARI and NAHB Remodelers. Furthermore, the new HIRI (Home Improvement Research Institute) and the Joint Center for Housing have forecasted that there will be a rise in home renovations. This means that a lot of homeowners may be looking to make improvements to their homes rather than putting them on the market. If you’ve established relationships with local contractors or lenders, it may be a good time to send referrals their way. If all goes according to plan, they’ll be happy to return the favor when they have new homes to sell!
The Bad and Ugly Trends
Unfortunately, there have been a few trends that we should be cautious of, because we’re not out of the woods just yet. Consumers are confident in the economy now, but month-to-month readings have indicated some uncertainty about where the market is headed. Although there has been some job growth, the unemployment level is still not in a comfortable place and young adults are in massive debt.
This is especially true among today’s college graduates and the rest of the millennial generation. With student loans piling up and graduates having challenges landing a job, young adults are finding that purchasing a home is out of their reach. In fact, seventy percent of the 2015 graduating class have an average debt of $33,000. This makes them the most indebted graduating class ever – and 3 million of these younger adults are not buying or renting, but instead are living in their parents’ basements (NPR). In these cases, perhaps you build up your rental property portfolio and foster relationships with the younger generation to get them out of their parents’ hair.
Also of concern is that home ownership has dropped slightly and is generally at a low level. There have been many questions about how the Affordable Care Act will negatively impact consumer confidence and spending. Furthermore, global events in Crimea, the Middle East, North Korea and Europe could make way for some unstable times or (gulp) another economic recession. These findings support the notion that we should take comfort in the progress we have made, but also be cautious.
Looking for a way to stay on top of housing market trends in your area? Take a look at the Homes.com Local Market Index Reports to see how your area is faring and stay up-to-date on any emerging trends that could affect your business and clients.[cf]skyword_tracking_tag[/cf]