Why We Could Be Headed for a Real Estate Boom

Photo of author

(Newswire.net — June 14, 2020) — Right now, the real estate market is teetering on uncertainty. After years of consistent growth, and unusual economic conditions thanks to the COVID-19 pandemic, economists and real estate experts are split on whether the real estate market will explode in popularity or enter a new pseudo-depression. However, many indicators suggest we may be headed for a surge in real estate buyers, driving prices higher—at least in the short-term.

Preparing for a Boom

If you believe we’re headed for a real estate boom, there are several ways you could prepare, depending on your circumstances:

  • Prospective homebuyers. If you don’t own a home or if you’re interested in purchasing a new home, this could be the perfect moment to move forward. Interest rates are low, and prices haven’t yet spiked, so multiple variables could be playing in your favor. If you wait too long, prices could skyrocket, limiting your potential options.
  • Current homeowners. If you’ve been thinking about selling your home or downsizing, price changes in the coming weeks and months may push you to make the decision. Keep an eye on price changes in your neighborhood; if you notice a rising trend, consider listing.
  • Professionals and investors. If you’re interested in a career change, or if you’ve always wanted more involvement in the real estate market, this could be the perfect opportunity to get started. With a few dozen hours of courses, training, and exams, you can earn your real estate license online; once you have it, you’ll gain access to far better real estate deals, and you’ll have more knowledge you can use to make smart investments in your area.

Factors for a Real Estate Boom

What factors are pushing us toward a surge in real estate buying activity?

  • Low interest rates. The Federal Reserve has slashed interest rates, mostly in an effort to maintain economic growth in the wake of the COVID-19 pandemic. These core interest rates significantly affect how banks distribute loans to businesses and consumers, resulting in a trickle-down effect that makes it easier (and in many cases, cheaper) for people to buy homes. People whose credit scores would have prohibited them from buying homes may now find accessible options, and people holding out for lower mortgage rates may suddenly find themselves interested in buying.
  • Millennial buyers. Historically, millennials have been less likely to own homes than their older generational counterparts, due to a variety of factors, but millennial interests are beginning to change. For starters, millennials have struggled with lower wages and lower access to capital than their older contemporaries. But after years of career development, they have access to more money—and they’re witnessing price drops in some key areas. Additionally, millennials have preferred renting in densely populated urban centers over owning homes in more remote areas; thanks in part to the conditions of the pandemic, those preferences are beginning to change. These days, more open space and less dense populations are seen more favorably.
  • Remote work possibilities. It’s also worth noting that many businesses and organizations have temporarily switched to operating remotely, and may continue operating remotely indefinitely into the future. As people discover the benefits of working from home, they may be incentivized to continue this momentum. If working from home, you can feasibly live anywhere without giving up your current job, so in the coming months, we may see a wave of people moving to areas that are more interesting, less expensive, or both.
  • City flight. There’s also a chance that the COVID-19 pandemic and the events that have followed could lead to city-specific flight. People who are uncomfortable with the political decisions of their local leaders, or those who are afraid of a similar event recurring in the future may be interested in moving to a completely different area of the country.

The Importance of Neighborhoods

While we can plot and speculate about national-level trends in the real estate market, there’s a limit to how much we can predict or analyze at that level. It’s more important to focus on specific cities and neighborhoods, where real estate trends are more definable. In some areas, prices are rising after skyrocketing for many years; these areas could be near economic bubble territory, and might collapse at the slightest hint of external pressure. In other areas, prices have increased at a stable rate; they may not see as drastic a boom as other areas of the country, but they’ll be subject to less volatility as well.

As always, do your own independent research and factor in local variables when making any kind of investment decision. It’s not clear exactly how the real estate market will develop in the coming months and years, but its growth trajectory will certainly be interesting.