The real estate industry is seeing some big changes if not actual upheavals. Much of it was brought on by the COVID pandemic, but some of it remains pretty inexplicable. Whether you’re a buyer or a seller, you need to know what’s going on in the industry. To that end, we offer these 5 things that might surprise you about the Silver Spring real estate industry.
1. Home Searches Going Digital
One big change in the Silver Spring real estate industry is that home searches have gone largely digital. The pandemic accelerated digitization across all sectors of industry and business, and that certainly includes real estate.
In fact, some buyers purchase their homes without ever setting foot inside the property before buying. This has been made possible with technology and virtual capabilities such as 3D tours, drone videos, and virtual staging.
And there are other aspects of the real estate industry that have gone digital. “Getting a mortgage can be done online now too. Millennials, who are notorious for their reliance on social media, are also turning to technology to learn more about their new neighborhoods. Websites . . . allow residents of a particular area to stay in touch with other locals and keep up with neighborhood events.”
2. Home Prices Continuing to Rise
You’re probably aware that home prices surged last year and the year before. The surprising fact about this aspect of the real estate industry is that home prices will continue to rise (though likely at a slower rate) owing to continuing low inventory and high demand.
“Shortly after the start of the pandemic, the housing market temporarily reversed course, as prices dropped and those looking to sell their homes reevaluated that decision. However, after a couple of months, prices went back up again. And the seller’s market was stronger than ever going into 2021. The median list price for a single-family home in 2020 reached $350,000 in September 2020, an 11% increase from September 2019.”
The good news in this for homeowners is that “[r]ising house prices have pushed up the home equity of current homeowners. Home equity is the overall home value minus the amount owed on it. So, as market value increases, home equity does too.”
3. Rental Property Market Declining
One truly surprising aspect of the real estate industry is the decline in the rental property market.
“Partly due to the shift of people from cities to suburbs, the rental market for both residential and commercial properties in big cities was on the decline in 2020. Demand for rental properties will continue to decline in the biggest cities as people who can afford it look to buy a house, and those who cannot, look for other alternatives to save money or fall behind on their rent. The number of young professionals who have given up their apartments and moved back in with their parents jumped last year. According to Pew Research, 2020 was the first time since the Great Depression that the majority of young adults 18-29 lived with their parents.”
But although rental vacancies are on the rise in major metropolitan areas, “demand for rental properties is actually going up in mid-size and smaller cities around the country as the demand for homes in these areas outpaces the supply.”
4. People Moving From Cities to Suburbs
Another trend in the real estate industry is that people are moving from big cities to the suburbs. This phenomenon has been fueled in large part by the COVID pandemic.
This city-to-suburbs migration is expected to continue for the next three to five years. And here are the drivers behind it . . .
The two underlying reasons for the shift are necessity and choice. Those who cannot afford to stay are moving out of necessity. While the wealthy are relocating by choice. Those who have lost their jobs and can’t afford big city prices anymore are moving in search of more affordable housing options. Last but not least, the suburbs are an attractive destination due to lower taxes and cheaper housing and rent prices. Some who are moving out of big cities are looking for suburbs that retain some of the big city feel, areas [referred] to as ‘middle neighborhoods.’”
5. Popularity of the Sun Belt Increasing
A related phenomenon in the real estate industry is the increasing popularity of the so-called Sun Belt.
“As Americans shift out of big cities, one destination they are moving to is the Sun Belt. The pandemic reinforced the increasing popularity of the Sun Belt, which is expected to persist for the foreseeable future. Approximately 75% of the country’s population growth in the past ten years has been concentrated in the Sun Belt states.”
But it’s not, as you might expect, just retirees relocating to the Sun Belt. “[T]he region is also becoming increasingly more attractive to younger professionals due to lower taxes and more affordable housing prices and rent. Additionally, even the biggest Sun Belt cities offer more space compared to the top US metro areas such as New York.”
What Real Estate Industry Trends Mean for You
The real estate industry is in flux, and it’s difficult to predict where it’s going next. What this means for you as a buyer or seller is that now more than ever you need the services of a good Silver Spring agent. But not just any agent – you need one who keeps up with trends and has the professional agility to adapt. And we have the agents you need. The Silver Spring real estate industry can definitely be challenging, so be sure to contact us at (301) 442-2368.