Now that we are a whole twelfth of the way done with 2020 we can see some of these expected trends flourishing. Before Christmas and the new year our real estate world felt like any other winter.. SLOW. However, now that we are back into the swing of things and hopefully still using that not so new gym membership, we are seeing some out of the ordinary patterns.
Firstly, we're for sure on track with the last couple years trends, but a bit more extreme in regards to an advancing spring market. In a typical market we will see the most action starting in March and going through June, but without a doubt us realtors are already up to our ears in eager clients. I am by no means complaining, but this definitely already feels a lot like the middle of April with long nights and weekend appointments. The sun going down at five o'clock definitely isn't helping my buyers out at all either!
I'm going to touch on some of the topics from 6 Steps for First Time Home Buyers here, so be sure to check it out if you haven't already. It's no surprise that we are still in a shortage being that we are down about three-thousand listings within our board since this fall, so if you have a house to sell we could sure use it in our inventory! And if you are a buyer, having that pre-approval letter ready and a good realtor on speed dial is a non-negotiable. Multiple offer situations are absolutely today's norm, and anything that is priced right in a hot pocket area has a good chance of going for five to ten thousand over asking with 30 days possession after close if it's not already vacant. Keep in mind, this isn't your parents market for my first time home buyers!
For our hot market in the Greater Grand Rapids area, the price range between 130k and 200k is where the highest demand is. Let me elaborate on some reasoning for this, and why it's only going to get more excited. Obviously, this is where every first time home buyer is looking for something that's move in ready with a bit of work to gain some sweat equity. This is obviously a major driver of this, but not the whole story.
To further exaggerate this spike is the fact that the nation is experiencing a huge generational shift. Not only is almost every millennial now matured enough for the housing market, but now we have generation Z flooding into the market. They are especially looking at the lower price ranges, and the fact that living with your significant other is becoming a common trend they have more buying power. If you are in this situation, the best way to deed the property in both your names is to use an LLC. or a Trust where each partner owns a 50% interest with named beneficiaries if god-forbid something were to happen to one of the trustees. That way the property has individual ownership, and it's relativity easy to split the asset in the result of a breakup, because lets face it, breakup court isn't a thing!
In case the younger generations were't already buying up real estate like a fire sale; there is also a tsunami hitting the market. A silver tsunami to be exact. This is a result of our society aging, because you know people are on average living longer thanks to the magic of modern medicine. As the baby boomers are progressing into their golden years they are also downsizing from that huge family home. This is good news for anyone in the 300k-500k market because there are some absolutely stunning properties hitting the market! And without all the demand our lower price ranges are experiencing . However, this older generation is looking back at those 180k-250k ranches where they are getting into some fierce competition with my millennial colleagues, but lots of these boomers already have years of equity and assets to assist them with their buying power.
Words to the wise, us young guys can run and type faster, so better get to that house before the open house, because by then it may already be too late! Unless they are looking to hold offers. If that's the case, be ready to max out that pre-approval or ask your lender for an increase if you want to win the bidding war!
Also, with this exceptional economy there are many people looking to invest, and are sick of sitting on the sidelines in anticipation of a market crash. That's all well and good because I'm a strong believer of not chasing the market. Real estate historically always appreciates even if it means sitting on that investment property for 10 years while renting it out to recoup some of the expenses incurred during a downturn.
These investors are frantically eating up the 70k-150k market. As proof of this, nearly half of all houses I show are modern and updated with the last buyer only owning it since 2018. Advice to my investors; stop putting lipstick on a pig. I see tons of those houses sitting on the market thanks to their cheap and shoddy work. If there isn't enough meat on the bone in a deal to do it right, then figure something else out! Otherwise, you might be sitting on that property for way too long while you pay the taxes, and end up having to drop the price to where you would be lucky to break even. If you can't flip a house due to budget constraints, then plan B is to do a rental. Landlords are able to pay more for a property because the big number isn't as important thanks to the monthly cash flow the rental generates. Also, during a flip ask yourself, "would I enjoy living here?" since most people are usually very up to date on design trends, and fall in love with that over many other rational factors.
Without a doubt modern is still most definitely in, but it's also evolving. We all know how old becomes new again as history shows us, so that modern look is starting to look a bit different. Butcher block counter tops are replacing granite, and copper farmhouse sinks are putting shiny stainless to shame. We are by no means going back to those orange oak cupboards, but wood grain is absolutely beautiful in some of these kitchens. Also, brick work is timeless both in years and design. I don't know about you, but I enthusiastically appreciate the hard work that goes into finely laid brick! (Note: brick work adds value)
That's my short list of trends I am seeing, and I'm sure there are plenty more my friends. Also, be sure to check out those interest rates! I've recently seen rates as low as 3% on a 15-year mortgage. That is absolutely nuts! Don't miss out on all that buying power, and make sure to research how much rates actually change how a mortgage looks. A half a percent can be the matter of thousands of dollars for the life of a mortgage. Have an awesome weekend and watch some football!
Fun fact: the average person will eat 10,800 calories on Super Bowl Sunday! I better see all of you, and your selfies at the gym Monday!
Thank you so much for reading,
Century 21 Affiliated