We’re only a few months away and 2022 has already been a whirlwind year for the real estate world.
Mortgage rates have reached highs not seen since pre-pandemic, but even so, buyer demand has surged. Indeed, according to the real estate brokerage red finalmost three out of four buyers are now faced with a higher bid.
But that’s just a snippet of what’s going on in the hot real estate world. Are you preparing to buy, sell or invest in real estate soon? If so, here’s a look at some of the other real estate trends you should have on your radar.
1. Lower affordability
Thanks to rising mortgage rates and soaring house prices, overall housing affordability is declining. When you add inflation and the continued rate and price hikes that experts are predicting, it’s unlikely to improve anytime soon.
The same goes for rents, which are also on a tear lately. Although this does not 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 can buy a multi-family property and rent the additional units at a higher price.)
2. A demand 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 local family, there are ways to monetize your investment — and sooner than you think.
As Fool.com contributor Kristi Waterworth says, “Rather than buying and holding your virtual property and waiting for a buyer, choosing to rent it out can start generating revenue now. Many companies are already looking for a way to get a foot in the door of their favorite metaverse platform, but not be ready to fully invest in real estate.”
3. The Rise of Crypto Mortgages
I reported this week that a new company called Milo is offering the first crypto mortgage product, which allows buyers to leverage their crypto (just Bitcoin at that time) to buy a house and then pay off that debt over 30 years. The loans do not require any credit checks, down payments or tax returns.
People seem pretty interested. Milo himself said he has a long waiting list of crypto-savvy buyers (7,000 of them), and so far he has given out over $400 million in loans . Other companies also have similar products in the works. Ledn, for example, just raised $70 million for its Bitcoin-backed mortgage program.
4. Increased Interest in Cash Offer Solutions
Is competition tough for today’s limited supply of homes and cash offers? These are often the key to winning. In fact, according to Redfin, cash offers accounted for almost a third of all home sales last year.
Since the typical buyer won’t have access to $350,000 in cash (the current median home price), cash offer solutions are likely to pick up steam. These offers essentially make cash offers on behalf of the buyer, paying the money for the offer, then renting the home to the buyer while they apply for financing. In some cases, they also act as a lender. Companies offering such solutions include Ribbon, Accept.inc, Orchard and Open door technologies.
5. Pivots in new construction
New construction has, fortunately, started to make gains in recent months, but what is most notable? This would be the size and type of homes being built.
According to the National Association of Home Builders, new homes are getting bigger and bigger. The average square footage actually dropped at the start of the pandemic, but has now started to increase. The average size of new homes is now 2,561 square feet, up about 6% over the past year alone.
Custom home and townhouse housing starts are also up, each recording an 11% year-over-year gain 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 invasion of Ukraine and other global events emerge, we can expect even more volatility in the coming months. to come.
If you plan to make any new real estate purchases, make sure you have enough cash reserves just in case. Not only will this help you win in today’s competitive landscape, but it can also protect you if the market takes a turn.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.