Assetsoft - Blog #housing

Are single-family homes losing demand in the US housing market?

Thu, 08 Dec 2022 08:43:00 -0500

According to Wikipedia data and survey reports, more than 75% of the residential areas in the US are strictly allotted for single-family houses. This situation has further aggravated the housing crunch issue in the States. This situation has led many US states to go for reform plans for housing zones.

Many states like California and Oregon, as well as cities like Minneapolis and Charlottesville, Virginia, have all signed multiple bills to try and cut down on the number of single-family housing zones. This effort is made to solve the low inventory and shortage os housing issues crushing the US market.

Single-family homes are harder for renters to afford. Apartment list research data says that more than 91% of new households are filled with renters and tenants. The data also says that more than 87% of them all stay in multi-family homes because single-family homes are simply unaffordable and too big for small-family units.

Shelter Force reports and market analysis have pointed out that these single-family houses and housing zones are a big threat to aspiring homeowners and renters. Single-family homes take up more land but provide shelter to much fewer people, making properties unaffordable for new buyers in some locations.

This has led to a steep rise in demand for multi-family homes, and many new-age home renters and buyers who can afford single-family homes are also going for multi-family units. Why? This is more of a lifestyle choice and an effort for green housing and to reduce the carbon emissions of the real estate industry. So, are single-family homes losing demand, or does the market still remain the same? What does it mean for your real estate business? Read this article to find out every detail about it.

Many American cities are zoned for single-family houses

There is absolutely nothing wrong with single-family homes, but as a matter of fact, not everyone wants or can afford to stay in these homes. NAR survey reports say that most Americans spend more than 40 - 50% of their monthly income on finding shelter alone and keeping a roof over their heads. According to New York Times reports, cities like Los Angeles and Seattle have more than 75 - 81% of houses under single-family housing zones. This makes these places quite unaffordable for the rest of the population.

According to some shocking market surveys and statistics, it turned out that more than 50% of Americans have small households and nuclear families. But, single-bedroom apartments and small apartments account for only 12.5% of the market space. This means that most of the market is taken up by single-family homes. This has led many scientists and real estate business veterans to believe that single-family homes are no longer sustainable. The number of such homes should be reduced to solve the housing issue and make things affordable for the average American.

Is banning single-family housing zones the answer?

No, as per expert reports, banning single-family housing zones is not the answer, but making the laws a little more flexible than before is vital. Reducing the number of single-family homes to accommodate the growing population is the only answer. But some form of reckoning with single-family homes is required to battle the effects of climate change, racial discrimination, and other such issues.

Boston.com news reports have also mentioned that single-family homes are the biggest reasons behind the American housing crunch. They mentioned that many experts have asked why the nation does not get rid of these housing zones and nip the problem at the root. That is why recently, Minneapolis did away with its single-family house zoning laws. This does not mean all single-family homes will be bulldozed down to rubble. Certainly not. But it certainly means a more flexible scope of growth for all kinds of houses and allows a fair opportunity for people from all walks of life to afford and rent/buy houses. Cities that are safe in U.S.A are also getting more buyers.

New Americans are demanding a lifestyle change

In the older days, most Americans viewed multi-family homes as transition homes, but things are changing now. People are making a conscious choice to buy and rent multi-family housing units. This makes their lives, buildings and houses more sustainable in the long and affordable too. Millennials are more concerned about such things and are investing more time in thinking through their housing decisions.

Things like community amenities in multi-family homes and not private pools in each single-family home are starting to make sense for Americans. This trend has also given rise to the advent of mixed-use properties where most of life's basic amenities are found within the housing complex. Things like retail shops, shopping malls, food joints, offices and houses are brought under the same housing area. This reduces the overall carbon footprint of real estate and people in general.

The American housing inventory is low

According to CNBC news reports, they state that America is running very low on its housing inventory. It is believed that America is short on as many as 5 million houses on average. More than 12.3 million new households were formed, by only 7 million single-family homes were constructed. Where does the rest of the population go? Is it time to shift drastically from single to multi-family homes? Many experts believe that it is time, and many Americans and American cities are already taking the initiative to make the shift happen.

World Finance reports have found that the housing prices in America have risen by a whopping 40% from 2000 to 2022. This has made housing quite unaffordable for most work-class people and inventory really low. Many of the factors together are initiating the shift.

Strategizing ahead of the curve

f you are a real estate business owner or manager, these trends and the change in the way housing is viewed should be important for you. No matter what type of property you have under your portfolio, these trends will greatly impact your properties in the near future. Be it single-family homes or multi-family homes, both of them are going through changes of their own. You need to plan your strategy and leadership accordingly to accommodate these changes and work around them to ensure growth.

Confused about where to get started and which trends to pay importance to? Give us a call. Talk to our team, and consult with us to know more.

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What will the Housing Market Look Like in 2023? What are the experts saying?

Fri, 18 Nov 2022 07:06:01 -0500

The low mortgage rates during the pandemic and low income of one section of people helped a lot of Americans buy homes at cheaper rates. But this sudden boom was only short-lived. Eventually, this market had to go down because the number of houses and land was not increasing with demand. The housing inventory is overwhelmed and is again driving up the average home prices.

According to Fortune’s news report and market analysis, this sudden boom in demand during the pandemic led to a severely low inventory. It was so low that the records hit a 40-year low. Statistically speaking, another major reason was that millennials became of home buying age during the pandemic. With remote work, this generation started saving a lot of funds, and many went to invest this in buying houses.

This sudden rise in demand also led to more investors coming into the housing market to start bidding wars. The prices of homes started growing sharply, and the rising inflation and Fed rising rates also led to a steep rise in mortgage rates. All of these factors together shook up the whole housing market in America for both 2023 and 2024. Experts believe that the pandemic boom has left a long-term impact and the ripple effects are here to stay.

Are you a real estate business manager or owner who wonders what the market will look like in 2023? As the year comes to an end, many expert opinions and market reports are coming our way. Read this article to learn every detail about the housing market predictions for 2023 and plan your strategy and leadership to benefit from these predictions.

What is the present housing market in 2022?

Before we dive deep into the housing market predictions for 2023, we need to know the present conditions of the market to throw light on the future. What does the present market in 2022 look like? According to CNN news reports, the home prices in the US reached a record high in June; the median price touched a whopping $416,000. But the same predictions also believe that now the prices will increase slowly, unlike in the beginning months of 2022.

The price has slowed down comparatively, even though the prices reached a record high. The increase in June 2022 was only by 13.4% for existing homes, whereas the increase was more than 23% in June 2021. The prices of newly constructed homes are actually going down a little and are stabilizing the housing market, which is acting as a good sign for real estate companies.

But existing homes only make up 10% of the total housing market in the USA; on the other hand, existing homes make up the rest 90%. Though the price rise is slowing down, it is still at a record high, putting pressure on existing inventory. Many first-time homebuyers are finding it difficult to buy homes.

Even the mortgage rates have gone up steeply. So the homes that were affordable for the millennials at one time are no longer within their range. This has led to a lot of people backing out on home deals at the last moment. CNBC reports found that the home cancelation rates at the last moment are at a peak and are now at their highest since the onset of the pandemic. Rising inflation and mortgage rates are being blamed for these. But will things change for the better in 2023? Let us find out.

Housing market predictions for 2023. Will prices drop?

Zillow’s housing predictions and market survey believe that the housing prices in 2023 will slow down significantly. According to market reports, the current rates are at a steady 16% rise in prices. But Zillow also predicts that home prices will not increase or decrease at the same rates in every region across America. There are vast differences based on region, and you need to become aware of which ones will impact you more.

Fortune reports on Zillow predictions say that the average home prices in the next twelve months are likely to rise only 2.4%. Whereas a few months back, due to an unstable market, they made a prediction that the prices would rise by more than 7.8% in 2023. As we come nearer to the year-end, the predictions are changing, and they seem to be changing for the better. If prices drop, sales are bound to increase and help real estate businesses stay afloat in the market.

But why did this change of prediction happen? Experts feel that this mostly happened because of the housing recession that is setting in due to low inventories and low economic transaction rates.

What will the overall American housing market look like?

According to Fortune news reports, they believe that millennials grew up at the worst time to buy their first houses. Millennials now account for 43% of the total home buying demographic, but many of them can not dream of affording their own homes. Inflation is rising, many people are losing their jobs due to the pandemic, and mortgage rates are skyrocketing. Combined with these factors, most millennials will find it very hard to own their own properties in the coming years.

Mortgages may still remain high

The mortgage rates jumped 2% in 2022, mostly because the Feds increased their borrowing interest rates. This made even affordable houses quite unaffordable throughout 2022. But CNBC reports believe that as 2023 proceeds, the rates will subside a little and become stagnant somewhere around an average of 4.5%. But what the future holds is yet to be seen. Though 4.5% is much lower than the current rates in 2022, it is still much higher than the general average. So how this impacts home sales remains a matter of debate.

Preparing ahead of time for the 2023 housing market

Have you prepared your strategy and leadership to go into the new year and grow and flourish your business in 2023? The housing market predictions are a mix of positives and some negatives. So you need to work around or with these predictions to plan your business strategy for the upcoming year. If you are a little overwhelmed with the process and the volatile market around you, we can help.

Get in touch with us to know more!

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Emerging Housing Market Trends To Know in 2022

Thu, 14 Apr 2022 00:08:29 -0500

The COVID-19 pandemic has changed the real estate and the housing market. The market trends and housing needs, in general, has changed so much that property managers across the world must rethink their strategies.

Some housing needs have become obsolete and need to be reshaped or reinvented to stay relevant. In 2022 when the pandemic has almost become a part of our daily lives the real estate market is finally bouncing back to normalcy. But there are many trends that are new to this post-pandemic era. As a property manager or real estate business owner you must know them inside out.

Top housing trends to take into account in 2022

So what should you expect now as a property manager or owner? Has the unpredictable market trends in the past two years left you shaken? Here’s all that you need to remember about the rising housing market trends of 2022 to stay on top of it.

Now, climate crisis is more important for real estate

The recent green peace movements and the rising importance of climate change have sharply affected real estate. Post-pandemic the millennials have reached a potential home-buying age. These millennials are a set of aware people who want to do their part in helping the climate crisis.

The present structure of real estate is the biggest contributor to greenhouse gases. The millennials are not taking it lightly. The housing sector alone uses 40% of total global energy. Instead, now millennials are looking for eco-friendly and sustainable housing options for a greener and cleaner future.

The use of technology in real estate is rising

The global trend of social distancing and virtual lifestyles has changed the way people survey and buy homes. From 3D tours, virtual staging and drone views, property management has incorporated all of it to reach customers at their homes. Business owners now use property management software to get the back office work done quicker and at less cost.

Like Zillow is already using virtual tours and chatbot interactions with potential customers to change the home shopping experience.

You need to take notice of these trends and make better technology selection in project management. The sudden shift can come with a lot of extra work. The best solution would be to onboard a project management consultant. At Assetsoft we provide the best technology selection for your housing business. Use Yardi project management for back office needs or property management. You can also use project management UiPath for AI-based solutions to immediate client needs.

Affordable housing is a major issue

The pandemic has left many people jobless and many had to take major pay cuts to stay employed. The shift in income trends has largely affected house buying and renting trends as well. Nearly half of America (49%) feels that their own local communities lack affordable housing for them. The trend has especially risen post-pandemic due to incomes taking a major hit.

Surveys believe that only 56.6% of the total homes sold last year were affordable enough for an average American family with a standard income. This trend will stay put if the economy and jobs do not go back to their normal state very soon.

Hispanic homeowners are on the rise

The Hispanic population has always had their share of problems in becoming homeowners in white-dominated the USA. In 2020, not more than 49% of Hispanic people in the USA owned their homes. From racial prejudices to unequal paychecks, a lot of factors played a part in this. But this figure is changing quickly.

An Urban Institute study insists that the number of new Hispanic or Latino homeowners will reach as high as 70% by 2040. If this is any number to go by then as a property manager you know where the next real estate market boom lies.

The rise of mortgages might be a major concern

Mortgage rates reached an all time low when the pandemic hit the world. An average 30 year mortgage loan had an interest of 2.93% in January 2021 and reached 3.12% in December 2021. The rates remained quite low throughout the year. But housing experts believe that the housing rates are set to rise in this new year. Why? Multiple factors are playing a part. The major impacting factors are the rising inflation and change in customer spending patterns. The Federal Reserves has plans to cut down on buying bonds is also influencing the rise in interest rates. At present the interest rates stand at a 3.92%, which is a much higher rise in the past 2 months than the whole of lasy year. Housing experts believe this might increase the price of housing, but they are hopeful that the shift will be slow.

A major shift from cities to suburbs

A Zillow study says that more than 47% of millennials now stay in suburban areas compared to their boomer parents. There are multiple reasons for this. One is the option of complete remote work. A huge chunk of the millennial crowd now permanently works from home and that gives them the liberty to stay anywhere. Suburban housing prices are comparatively lower and millennials now value their money more than ever. They are getting the best of houses in the suburbs at cheaper rates than in cities.

The suburbs also make a great housing option due to lower taxes and comparatively lesser upkeep than cities. Market researchers say that this trend is here to stay.

Get the Property Management Solution that Works for You!

No matter what your need is in real estate, our team of experts can help. From the latest technology-based solutions to consultations, you can find all of that at Assetsoft. Do not fall behind on the housing market trends. You must use better strategy and leadership plans to rethink your business plans based on these trends. Talk to us to understand how our property management, asset management and construction services can help you be in sync with the trends.

Book a free consultation call with us today and discuss more. Talk soon!

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2021 Renters Report across U.S. and Canada: Top Developing Trends

Fri, 18 Jun 2021 11:35:36 -0500

Across the world, the rental property market is impacted by Covid-19. As the world recovers from the pandemic, the market is expected to reach $1765.5 billion in 2021. With the real estate trends changing, let’s explore how the market fares in different countries.

United States

Urban to Suburban Shift

The high-cost urban cities of the U.S. were affected the most by the Covid recession due to five factors

Remote working
Reduced use of public transport
Need of more living space
A desire for easy outdoor access

Closing of essential urban amenities

Along with these factors, the high cost of urban living was also a promoting factor for more people to shift from urban to suburbans. In 2021, the trend will continue causing a decrease in the rent prices in metropolitan cities and making suburban areas the key to rental market recovery.

More Demand For Single-Family Housing

As more people work from home, the need for multi-room spacious houses is increasing. Single-family homes have become much more sought after due to the privacy and space they provide. The John Burns report states that the Single-Family Rental market Index has reached 90 in the first quarter of 2021, an all-time record high.

Multifamily rents went down sharply in 2020 and are expected to follow the same trend this year. According to the FreddieMac 2021 Multifamily Outlook Report, multifamily property rents are predicted to decline by 0.2%, with large markets like New York and San Francisco performing much worse.

The Best Rental Markets

Boise, Idaho

Boise is seen as the best long-term real estate investment. Even during the pandemic, the city’s property prices have continued to rise. In 2021, Boise is predicted to see a sales growth of 9.8% and a price growth of 9.1%. Despite the growing prices, the demand for property in this city remains high.

Dallas, Texas

Dallas is a city with growing job vacancies, which means the demand for rental properties will also be high. With a projected population growth of 17.9%, this is one of the best real estate markets for 2021. However, investors will see good competition as the inventory is limited and the demand is high.

Tampa Bay, Florida

Tampa Bay is one of the most extensive metro cities in Florida and suitable for retirees. The purchase price for investors is about 32% below the national average. A fast-growing city, it provides exciting opportunities for real estate investment in 2021. The expected sales growth of Tampa Bay is 8.7%, and the price growth is 7.5%.

Jacksonville, Florida

With growing job opportunities, Jacksonville makes it to the list of the best rental markets in the U.S. The average rent in this city grew up to 8% as compared to last year. Jacksonville has diverse industrial opportunities in the fields of finance, healthcare, and technology. The city is expected to see a sales growth of 9.4% and a price growth of 5% in 2021.

Canada

Canada has also seen a drop in rental prices due to the pandemic, especially in major cities like Toronto. But this is expected to be short-term, and the market may recover as the pandemic wanes.

Detached homes will be a priority

Last year, many workers moved from urban to suburban areas due to remote working possibilities. As people prefer working from home, even as the pandemic subsides, suburban regions will still see a massive demand for rental property.

In 2020, the prices of one-story single-family homes rose by 15.9%. Detached homes are more suitable for remote working as they are more spacious and readily available in low-cost areas.

The Best Rental Markets

Hamilton, Ontario

Hamilton is home to several industries like food, hospitality, and healthcare. Over the last few years, the city has seen an increase in job opportunities and a steady increase in population. The prices are also lower as compared to other major cities like Toronto. This is one of the best cities to invest in single family homes, as their price has increased by 31% compared to the previous year. If you are looking to invest in Hamilton’s real estate, keep in mind that the inventory is extremely limited, with homes being sold within 14 days of listing.

Vancouver, British Columbia

Vancouver’s housing market is stabilizing, with transaction volumes returning to normal. The city is not just beautiful but also attracts a lot of people. With a projected population of 3.8 million by 2050, it becomes one of the best rental markets in Canada. Prices have increased for all types of homes in Vancouver, with the cost of detached houses increasing by 24% compared to last year. The city also has excellent amenities and a good transport network.

Windsor, Ontario

Windsor is an affordable real estate market whose prices are soon expected to rise. With a prediction of a 15 to 20% rise in the average residential sales price in 2021, it is a hot market for investors. Markets like Windsor that have low costs are only the beginning of a real estate boom. People investing in this city can expect high returns once the country settles from Covid-19.

Australia

Australia is experiencing a boom in property demand at the end of buying season. Several factors are driving people to invest in real estate. As the popularity of Australia rises, housing prices continue to soar, making it one of the least affordable countries in the world.

One of the driving factors for increasing home rates is Australia’s excellent handling of the Covid crisis. Some places have recently reported zero new cases of Covid-19.

Similar to other countries, the housing trends are indicating a shift to less populated areas. More people are willing to invest in single family homes, as they are more spacious and better for remote working.

But as inventory is tight, home prices continue to rise. This is the best time for investors looking to invest in the Australian rental property market. The Covid-induced buying boom is not expected to slow down anytime soon. Even as more homes are listed for sale, they cannot keep up with the vast demand. This ensures excellent returns in the coming years.

The average sales volume in Australia is 116% higher than last year. Out of the many factors, the fear of missing out is driving people to invest in property.

United Kingdom

After the pandemic, people of the U.K. have shown an interest in investing in real estate. Whether it is renting or buying, the trends look promising for the country.

Housing Boom

Unlike the previous year, the U.K. is witnessing a housing frenzy. Wealthy people are investing to buy homes as they are not as affected by the economic effects of the pandemic.

Similar to other countries, people are looking to move outside London into other less populated areas. As housing prices continue to rise, home buyers are seeking affordable housing outside urban areas.

The private rental price growth in the U.K. has reached 1.3% as compared to last year. Real estate investors can invest in suburban single-family homes as more people are looking to move. As the British pound gets weaker, many overseas real estate investors are looking at this as an opportunity to enter the British property market.

Northern England Attracting Residents

Liverpool, Edinburgh, and other affordable housing markets are attracting new residents. As a result, the rental prices are rising, with the average home price in Edinburgh rising by 12.3% over the last five years. The region also promises high yields, making it a good area for real estate investment.

Takeaway

The rental market is recovering from the impact of the pandemic. As seen in the above reports,

Most countries are witnessing a housing boom, with more people willing to buy or move homes.
Urban housing prices are dipping but may recover soon.
People prefer suburban areas as houses are spacious and affordable.
Single family homes are seeing increasing demand as they are feasible for remote working.

How to make the right investment?

If you want to invest in real estate, your focus should be on collecting and analyzing valuable data to make meaningful investments. This can be made more accessible by getting the right data analysis software through Assetsoft. Using platforms like Yardi, MRI, and Procore, experts at Assetsoft can construct the right tools to suit your requirements.