5 Real Estate Trends to Watch Out for in March
Thinking of buying, selling, or investing in real estate this month? These trends should be on your radar.
Mortgage rates have neared highs not seen since pre-pandemic, but despite this, buyer demand has surged. In fact, according to real estate brokerage Redfin, nearly three in four buyers now face a bidding war.
But that’s only a snippet of all that’s happening in the red-hot world of real estate. Are you gearing up to buy, sell, or invest in real estate soon? If so, here’s a peek at some of the other real estate trends you should have on your radar.
1. Declining affordability
Thanks to rising mortgage rates and skyrocketing home prices, overall housing affordability is declining. When you throw in inflation and the continued rate and price hikes experts predict, that’s not likely to improve anytime soon.
The same goes for rents, which are also on a tear lately. While this doesn’t bode well for renters, buyers and investors could benefit from this trend. It may even help solve the supply problem for many. (Instead of focusing on single-family homes, you could buy a multifamily property and rent out the extra units at a premium.)
2. A clamor for virtual real estate
If you haven’t heard, metaverse real estate is the next big thing. While you can’t move in or rent it out to the family down the street, there are ways to monetize your investment — and sooner than you think.
As Fool.com contributor Kristi Waterworth puts it: “Rather than buy and hold your virtual real estate and wait for a buyer, choosing to rent it can start bringing in income now. There are plenty of businesses out there already looking for a way to get a foot in the door in their favorite metaverse platform but may not be ready to fully invest in property.”
3. The rise of crypto mortgages
I reported this week that a new company called Milo is offering the first crypto-backed mortgage product, which allows buyers to leverage their crypto (just Bitcoin at this time) to buy a home and then repay that debt over 30 years. The loans require no credit check, down payment, or tax returns.
People appear to be pretty interested. Milo itself has said it has a long wait list of crypto-savvy buyers chomping at the bit (7,000 of them), and so far, it has issued over $400 million in loans. Other companies have similar products in the works too. Ledn, for example, just raised $70 million for its Bitcoin-backed mortgage program.
4. Increased interest in cash-offer solutions
Competition is stiff for today’s limited supply of houses, and cash offers? Those are often the key to winning out. In fact, according to Redfin, cash offers accounted for almost a full third of all home sales last year.
Since the typical homebuyer won’t have access to $350,000 in cash (the current median home price), cash-offer solutions will likely pick up steam. These offerings essentially make cash offers on the buyer’s behalf, fronting the money for the offer and then renting the home back to the buyer while they apply for financing. In some cases, they also act as the lender. Companies offering these sorts of solutions include Ribbon, Accept.inc, Orchard, and Opendoor Technologies.
5. Pivots in new construction
New construction has, thankfully, started to make gains in recent months, but what’s most notable? That’d be the size and type of homes being constructed.
According to the National Association of Home Builders, new homes are getting bigger. Average square footage actually dropped in the early days of the pandemic, but now it has started to move upward. The average square footage for new homes is now 2,561 square feet — up about 6% in just the last year.
Custom home and townhome starts are also on the upswing, each notching an 11% gain year over year in the final quarter of 2021.
The real estate scene is changing
It’s never a dull day in real estate, and as inflation, the Ukraine invasion, and other world happenings rear their economic heads, we can expect even more volatility in the months to come.
If you plan to make any new real estate purchases, make sure to have plenty in cash reserves just in case. Not only will it help you win out in today’s competitive landscape, but it can also safeguard you if the market takes a turn.
Source: The Motley Fool
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