Let’s do a quick 2018 recap on the real estate market… you know, just so we can all can have some closure.
So, as we do, let’s talk Real Estate, let’s talk 2018 REAL ESTATE RECAP…
SO WHAT HAVE WE SEEN?!
INTEREST RATES ROSE
Mortgage rates hit an all time high since 2010 lingering around 4.7% (peak of 4.86%). What does that mean? Honestly, this took a significant amount of buying power away from those who did not have much wiggle room to begin with. For example, a buyer with a $2,500 monthly housing budget lost nearly $30,000 in purchasing power this year.
All that being said, mortgage rates are still at a long term historic low (& in recent weeks even decreased again) so buyers might consider continuing to lock in these mortgage rates while they can.
SHORT TERM RENTALS ARE HOT
The short term rental game became super competitive in the tourism industry. Expedia acquired Pillow and AprtmentJet this year after buying Homeaway back in 2015. Pillow helps apartment owners work with their long term residents to turn occupied units into short term rentals. ApartmentJet allows multi-family owners to turn their units into “guest suites”. These acquisitions expand accommodation options for Expedia travelers while simultaneously benefiting local tourism and property owners. For example, if you own a house, you can now, through Expedia, rent out a single room to travelers. We saw that homeowners are becoming increasingly interested in this option as “side hustles” have become a a very real part of our society’s culture. Oh, and it can help them make up for that added interest they may be experiencing with the increased mortgage rates.
MILLENNIALS WERE NOT REALLY INTO BUYING HOMES
The fact is homes are not as “buyable” as they used to be for the average young millennial. The millennial generation actually encompasses a pretty wide age range so I am really talking about those <30 years old. Why? There are a few factors – these guys are not looking to place their roots as young their parents were, student debt is at a crazy high, home prices raised quicker than the average income, and home ownership does not necessarily hold the same caliber it once used to (for some). This all being said as the millennial generation gets increasingly older (the oldest are approaching 38 years old), we may see this trend start to shift.
TINY HOME, BIG PLAYER
Homes ranging in ~400 sq ft – 1,000 sq ft became EXTREMELY popular in this year’s real estate market (thankfully for us and our Binghamton ventures!!). The younger generation are using these homes as a “starter home” and the older generation are seeking them as a tool to live freely while downsizing. We actually saw this trend come to light ourselves in the Binghamton market and are SO GRATEFUL! We have a ~800 sq ft home that proved to be super popular this year!
SINGLE FAMILY RENTALS ON THE RISE
I am SO glad that Forbes is calling this out because we also saw this! While many investors are interested in multi-families as they are deemed less risky and can potentially give you more bang for your buck, we have seen the most luck thus far with our SFR rental. It turns out, in our market at least, that many out there still want to live in a home they may just not be able to or do not want to purchase it for their own!
THE NEWS SERIOUSLY IMPACTS LOCAL MARKETS… & QUICKLY
The announcement of the new Amazon HQ locations caused a drastic shifts in the real estate markets in Long Island City, NY and the Northern Virginia area. In Long Island City alone, real estate agents saw a 794% increase in online views of homes for sale in November. While this stat sounds AWESOME for these two markets, many speculate whether or not these moves are truly worth the local tax incentives. While these Amazon moves are projected to bring $5B of investment to these local areas over the next 15ish years, sources say these moves will also cost local taxpayers a total of $3.4 BILLION DOLLARS…. hello, that is A LOT. Biggest concern in these two areas? Increase in the local income gap without enough jobs to support those that are on the lower end of this spectrum.
REAL ESTATE & POLITICS WORKED HAND IN HAND
Real estate data can now predict how you vote (at least it did in the most recent elections). While we have historically had an idea of what our nation’s “Red” and “Blue” states were in any given election, we saw that become even more of a thing these past couple of years. Studies showed that where people lived had a significant factor in which side of the political spectrum they sat (for the most part).
INCREASE IN HOME INSURANCE
This year we have seen a TON of natural disasters. Between hurricanes and fires, more and more areas are being deemed “uninsurable”. This is forcing residents to decide whether or not to rebuild their roots where they are from or relocate elsewhere post-devastation.
THE MARKET CAN CHANGE IN AN INSTANT
It was just last Spring that buyers all over the country were preparing themselves to engage in a bidding war if they wanted to buy a home. Because of that, home prices were WAY higher than the previous year. Now, it is appearing as though (for the most part) those days are over. Supply seems to be increasing while the average buyer’s buying power is decreasing. One major metropolitan market that still appears to be seeing multiple offers per property? PHILADELPHIA – fingers crossed for Project Philadelphia that we continue to see this!
HOME BUILDER SENTIMENT DROPPING
It appears as we close out 2018 that home builder sentiment is at the lowest it has been since 2015. Why? This goes along the lines of what we are seeing above. Buyers are pulling back. The demand is not what is was at the beginning of 2018. Potential home buyers are hesitant due to the rise in home prices.
TEAMWORK MAKES THE DREAMWORK
NAR found that there was increase an in the number of realtor teams throughout the country. Realtors are banding together to close deals. On each team there is typically one main agent and a group of “support” to help facilitate each step of the deal. What can we take away from this?! Despite the influence of social media, and that fact that we are ALWAYS connected, it appears as though it is becoming increasingly difficult to sell a home by yourself. There are now so many teams out there who can collaborate and “outdo” some of the solo acts. But hey, that does NOT mean working solo is not do-able so if that is working for you YGG (you go girl). I hope to do the same maybe one day!
Technology appears to be totally changing the real estate game, from the way business is conducted, to the way buyers view listings, to how relationships are formed – the whole shebang. So experts are advising anyone working in the industry to get on board!
ONLINE PRESENCE IS BECOMING INCREASINGLY CRITICAL
MANY are turning to social media to build and expand their customer base. An online presence can now, in some cases, totally make or break your business.
Oh, what an interesting year it has been! What else did you all notice in the market in 2018?! What are you hoping to see in 2019?!
NOW, let’s get back to the holidays! Cannot wait to see what 2019 has in store for us all!
Feel free to comment on the blog post HERE and let us know what YOU think!
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