As we enter the second quarter of the year, it’s time to access the ongoing and upcoming trends in the real estate market.
Whether a buyer, seller, or agent, you need to have all these into consideration to ensure you make the right decision.
With the economy taking a major hit, investors will be especially affected.
2019 in Retrospect
History often repeats itself, and we can’t predict a course for 2020 without reviewing the previous year.
2019 saw the sale of 5.34 million existing homes, about the same with 2018.
Mortgage rates also retained their low prices from the previous year. This was a shining point for buyers.
Real Estate in 2020
From technological innovations to low mortgage rates, 2020 seems to be a promising year in the industry. However, an unexpected player may throw the sector into disarray.
A Paradigm Shift in Technology
Over the years, reliance on technology has greatly increased in the real estate sector, and 2020 will be no different. Technologies such as artificial intelligence, machine learning, big data, and virtual reality have seen a surge in usage.
From security to property management, technology is more relevant than ever.
A prime example is virtual tours, an application of AI and VR where buyers can explore their potential new homes without moving an inch.
AI can also help sellers analyze and evaluate the worth of their homes to be sold.
With AI, buyers can get recommendations tailor-suited to their preferences.
There has also been some headway made in robot-based agents, where realtors communicate with clients via a remotely controlled robot.
With Booking Ninja’s integration of Salesforce’s Einstein Analytics AI, you’ll get the best recommendations on what to do with your property.
What This Means
As a seller, ensure you get on board with the latest innovations in the market to beat out the competition.
As a buyer, your search for your next home might become more convenient when these innovations become more widely used.
Smaller and Smarter Homes
From Zillow, “Homes will continue to shrink. The sprawling, suburban homes that Baby Boomers coveted will increasingly become a relic of the past in 2020 and into the next decade as the median square footage of newly built, single-family homes will fall for the fourth time in five years. The typical U.S. home has shrunk by more than 80 square feet since 2015. Millennials, the largest group of buyers in 2020, are proving to have much different tastes and lifestyles than their parents' generation. Many prefer homes in urban areas with an abundance of amenities within walking distance over the mansions in the exurbs that boomers are vacating.”
This could be due to a variety of reasons such as lower prices, lower maintenance, and more accessibility.
Millennials also being tech-savvy are sure to expect their homes to be suitable enough to accommodate home AI assistants like Alexa and Google Home.
What This Means
If you own smaller property in an urban area and wish to sell, expect a lot of demand for it.
It also wouldn’t hurt to ensure the home is compatible enough to be a smart house.
Mortgage Interest Rates Are on the Decline
Keeping in line with 2019, mortgage rates are currently at an all-time low. It would be the best time as a buyer.
What This Means
With lower rates, home sellers should expect an increase in demand as buyers are more encouraged to purchase houses.
Reduction in the Growth of Home Prices
2019 experienced slower growth in house prices than 2018, and 2020 was expected to follow that trend. In 2019, just under 50% of houses were purchased under the asking price.
What This Means
As a seller, anticipate negotiation - do not expect your property to be purchased at or above your asking fee.
Widening the Gap Between Owning and Renting
At a current homeowner to renter ratio of 64% – 36%, the gap is expected to get wider this year due to lower mortgage prices and the slowing growth of home prices. The average age of renters is also higher with about 40% being aged 45 and above.
What this Means
Home sellers should expect more demand than landlords in the year. As a landlord, try making older individuals your demographic as they are the majority share in your customers.
Millennials will continue to be the Majority Home Buyers
Millennials currently hold the largest percentage of homebuyers in the United States. About 37% of homeowners are between the ages of 25 and 34.
What this Means
As a seller, expect most of your clients to be more tech-savvy and make significant use of the internet. You should ensure your listings are always up-to-date on your website and reach out via social media platforms.
You’d also fare better if your property is situated closely to educational areas as a lot of millennials search for homes close to their institutions of study.
The COVID-19 Game Changer
The first quarter has come and gone, but statistics generated by it may not be adequate enough for the projection of the rest of the year. This is due to the uncertainty of the effects of the currently spreading coronavirus disease. So far, the largest affected party in the real estate sector in the hospitality industry. Hotels, restaurants, and bars have taken a huge hit in this crisis, with the latter too being mostly shut down. This is no doubt hampered by the social distancing practices encouraged to circumvent the spread of the disease.
The development of new buildings has largely stalled due to the lack of materials being imported from China which provides the bulk and from which the virus originated.
Of course, the predicted recession, if at all it occurs, will affect customers’ ability to purchase higher-end homes. Plans will be diverted to more immediate needs.
Even with the virus gone, it could take a great while for things to return to normal in the real estate market.
This could herald a more large-scale shift to remote activities, and perhaps such breakthroughs like virtual tours could become the norm.
On the more technical side of things, real estate stocks severely plummeted in the month of March.
Conclusion
Expectation vs reality comes into play here.
The appearance of the worldwide coronavirus has thrown a wrench into the predicted trends and statistics for 2020, and right now, it seems things will become bleaker in the real estate industry. There’s no way to know for sure, however, so things might take a turn for the better.
For example, we might see the more technologically reliant options like virtual tours and robot-based agents become commonplace.
Why You Should Choose Booking Ninjas
Booking Ninjas serves as a middleman between you and your customers. We eschew the need to build an online booking system from scratch and let you concentrate on giving your clients the utmost satisfaction they deserve.
With our advanced booking engine which allows you to manage reservations, update your rates, and tailor customer experience according to your whims, among other powerful features, Booking Ninjas is leagues ahead of our competitors in the game.
We also efficiently keep track of and handle all your transactions so you don’t have to stress yourself over them.
With us, your clients will always be left feeling secured, satisfied, and smiling.
For more information, check out Booking Ninjas solutions.