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10 Housing Market Trends Real Estate Investors Must Know

With the housing market constantly evolving, staying informed about the latest trends is crucial for real estate investors. As of 2024, here are the key updates on the 10 trends you need to be aware of:

1. Building Material Costs Continue to Rise

Building material costs are still elevated due to ongoing supply chain issues and increased housing demand. Lumber prices, while predicted to drop by the end of summer, remain significantly higher than pre-pandemic levels. Copper prices have also maintained their increase, impacting construction expenses.

Takeaway: Stay updated on pricing data to accurately estimate expenses for property flips or renovations.

2. Shift in Supply and Demand Dynamics

The real estate market has experienced a shift from a strong buyer's market to an increase in listings, indicating a potential change in the supply and demand balance. While housing supply is gradually rising, the demand might have peaked, leading to a more balanced market.

Takeaway: Monitor the evolving supply and demand trends as it may impact housing prices.

3. Growing Competition from Institutional Buyers

Large institutional capital, represented by companies like Opendoor and Offerpad, continues to compete with individual buyers for single-family homes. Sellers looking for convenience are opting for quick deals with these platforms, posing a challenge for traditional buyers.

Takeaway: Finding underpriced properties might become more challenging as institutional buyers gain prominence.

4. Low Mortgage Interest Rates Showing Signs of Change

While interest rates hit record lows in 2021, there is a possibility of gradual increases as the economy rebounds. The Federal Reserve, for now, maintains low rates, emphasizing the importance of securing favorable rates for mortgages, refinancing, or long-term rental loans.

Takeaway: Act promptly to lock in low rates as they may not last indefinitely.

5. Home Prices Normalizing

Despite the pandemic, housing prices have continued to rise, but signs of normalization are emerging. Median prices have increased, but there's an uptick in price reductions and a plateau in houses sold above listing price, indicating a potential cooling off of the market.

Takeaway: Keep a close eye on trends to make informed decisions about selling at peak prices.

6. Housing Affordability Declining

Housing affordability is declining as consumer house-buying power decreases. While the market has been more affordable in recent years, recent trends suggest a reversal, signaling that home values might be reaching their upper limit.

Takeaway: Consider selling sooner rather than later if you're waiting for optimal selling conditions.

7. Mortgages and Foreclosures

With the expiration of the foreclosure moratorium, distressed properties may gradually enter the market. However, government assistance for eligible homeowners facing financial hardship may mitigate an immediate flood of foreclosures.

Takeaway: Keep an eye out for distressed properties entering the market in the near future.

8. Real Estate Bubble Not Imminent

Unlike the 2008 housing market crash, the current surge in home prices is primarily driven by supply and demand factors. Stricter lending standards, an increase in fixed-rate mortgages, and a growing population support the housing market's stability.

Takeaway: The market is unlikely to experience a repeat of the 2008 crash due to improved lending standards.

9. Landlords Benefit from Rising Rent Prices

Rent prices continue to rise, creating favorable conditions for landlords. Historical highs are observed in many metro areas, and the median rent has increased significantly compared to the previous year.

Takeaway: Being in the rental property market remains advantageous, especially with increasing rent prices.

10. Investor Activity on the Rise

Investors are capitalizing on the current housing market trends, with a significant increase in residential real estate purchases. The surge in remote work has led to a shift in demand towards more affordable, mid-sized cities, contributing to soaring property prices.

Takeaway: Investors are profiting from high rental prices and increasing property values, but it's essential to stay vigilant as trends suggest prices might be reaching their peaks.

Ready to invest? Whether you're interested in a quick flip, bridge, or long-term rental investment, consider exploring Longleaf's offerings, including low, fixed-rate long-term rental loans and expedited hard money loan processing. 

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