Expected the Unexpected in 2020

What Trends to Keep an Eye on in Summer 2020

Along with all business and industry, real estate selling has been deeply affected by the coronavirus crisis. The Department of Homeland Security declared residential real estate to be an essential service, but many cities and states have enacted specific restrictions to protect public health.

As healthcare professionals work tirelessly to contain the risk, states are beginning to open up. What real estate trends can you anticipate this summer as we enter the “new normal?”

Generational Buying

The so-called “silver tsunami” continues as baby boomers enter retirement age with plans to downsize. At the other end of the scale, percentage increase in Generation Z mortgage applications experienced triple-digit growth over a period of one year. These factors point to an increase in demand for smaller, more affordable homes.

Economic Fears

Experts were already predicting a recession for the 2020-2021 period. Waves of business closings and unemployment claims triggered by the coronavirus crisis have turned talk toward a possible depression. Unlike the financial crisis of the late-00s, this economic climate is not driven by housing. Low interest rates could help real estate selling weather the storm.

Move to the Suburbs

Suburban growth was already on the rise, thanks to millennials starting their own families and looking for affordable housing. Watch for this trend to continue, as health concerns cause more people to leave densely populated urban areas.

Rise of iBuyer

iBuyers, who use automated valuation models (AVMs) to make cash offers on homes sight unseen, appeal to sellers who are looking for speed and convenience. While these programs have grown in popularity, they remain a hotly contested topic in real estate selling.

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Sell Your Home Fast!

What Are the “Real World” Impacts on Real Estate Buying and Selling during the Coronavirus Pandemic?

The ups and downs of the country’s economy usually drive real estate trends, but this year’s coronavirus pandemic is casting a shadow the likes of which have rarely, if ever, been seen. What are the ramifications for the real estate market? Here’s a look at the likely short- and long-term effects of coronavirus restrictions.

Short-Term Effects

• Real estate agents are allowed to show only vacant homes and open houses are banned, bringing sales to a near standstill. 

• Sellers are being asked to sign a Listing Agreement Coronavirus Addendum, which stipulates the conditions under which the home may be shown. In addition, agents, sellers and buyers must sign a Coronavirus Property Entry Advisory and Declaration (PEAD) assuming risks related to COVID-19.

Online video tours, already a significant element in real estate marketing, have become even more essential, with many of them being conducted live.

• Agents are not permitted to distribute business cards, flyers and other paper-based marketing materials

• Appraisers, inspectors and other professions involved in real estate transactions may or may not fall under the “essential services” umbrella. Regardless, many of them may choose not to work at this time. As a result, delays are likely in any potential transaction.

Long-Term Effects

• Most governors have stated plans to roll back restrictions slowly, meaning recovery will be gradual, not immediate.

• The buyer pool may continue to remain low, depending on how many are reluctant to resume normal activities. Those who do forge ahead will enjoy the benefit of lower interest rates.

• As transactions continue to experience delays, cash sales may become the preferred method.

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What to Know About the Luxury Real Estate Market in These Uncertain Times

Future Trends In The Luxury Home Industry – Where Things Are Headed

The specific definition of “luxury real estate” may vary from one market to another. But one thing all luxury real estate has in common is that it involves the higher-priced properties in a certain area. 

More than other properties, luxury real estate selling involves promoting the lifestyle that goes with it. Dora Puig, a successful luxury real estate broker in South Florida, weighs in on upcoming trends fueling the high-end market.

Luxury Home Trends in 2020

• Tax reform is motivating CEOs, tech executives and other upper-income people in high-tax states to establish primary residences in Florida, Washington, Nevada and other states with lower or no income tax.

• When it comes to a wish list of amenities, security and privacy are often underrated. People who can afford to spend millions on a home don’t want tour buses passing by or other intrusions on their privacy. 

• People are doing more private entertaining at home, so party rooms and salons are becoming less desirable in luxury condominium developments. Instead of these spaces, people are looking for more amenities for children and teens.

• Cathedral ceilings, luxury finishes and large dressing rooms continue to be popular features, while indoor-outdoor living is preferable to rooftop decks.

• Thanks to the rise in Uber, Lyft and other ride-sharing programs, people are less dependent on their cars, so look for parking to decline in value as an amenity.

• Wealthy buyers tend to be art collectors. As a result, many of them favor clean, modern architecture. There has also been a shift to Classic Deco and Mediterranean exteriors with modern interiors.

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Millennials, Baby Boomers, and Market Shortage: What To Know About The Real Estate Landscape Today

Millennials and baby boomers are at opposite ends of the generational spectrum. How do their needs shape current real estate trends? Here’s a look at how the market is shaping up for 2020.

Inventory Shortage Continues

Last year’s drop in interest rates created a fierce demand that resulted in tightening available inventory. This year, as the largest group of millennials turns 30, many of them are expected to buy their first home. Add to that the fact that a number of baby boomers are choosing to stay in their current homes longer, and the housing market will continue to run short on inventory.

Tough Times for Landlords

Thanks to rent control measures enacted last year in New York and California, average investment in multi-family properties has already begun to decline. In addition, home prices continue to rise in traditional spots like NYC, Los Angeles and San Francisco as well as new hotspots in real estate trends such as Seattle, Portland and Nashville. As a result, it’s become extremely difficult to break into home ownership. 

Demand for Starter Homes Rises

As effects of the Great Recession continue to fade, millennials are in a better financial position to buy their first home and start a family. But they’re also competing with baby boomers, who are looking to downsize as their families leave the nest. Builders will take advantage by focusing on development of starter homes.

Home Price Growth Slows Down

Workers are migrating to major urban areas, which are experiencing the bulk of job growth. Rising real estate prices in those spots will be forced to slow down until wages reach a level that can once again support them. 

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Downsizing Is Good!

5 Real Estate Agent Tips For Downsizing Baby Boomers

Upwardly mobile baby boomers had a mantra of “More space!” as they looked for larger homes to accommodate growing families and increased possessions. Now, as empty nesters look to downsize, they’re headed in the opposite direction.

How can you best serve home buyers in their period of transition? Here are five helpful tips for real estate selling to downsizing baby boomers.

1. Evaluate Current Space and Possessions

Wanting a smaller home is a vague goal. Have your clients take a careful look at their current space and decide which features they could do without. Do they need more than one spare bedroom? Does the formal dining room get any use? 

2. Start Downsizing Immediately

The sooner your clients can begin eliminating unwanted furniture and home accessories, the easier the task will be. If they wait too long, they may be forced to take them along and put them in storage, which is an additional expense they don’t need.

3. Obtain SRES Designation

A Senior Real Estate Specialist, or SRES, has completed specialized training focused on working with seniors and evaluating their unique need. SRES certification will give your clients additional confidence in your ability to help them.

4. Budget for Monthly Housing Costs

All homes come with property taxes, HOA fees and other costs that must be included in the overall budget. Baby boomers on fixed incomes need to be particularly accurate in accounting for all expenses.

5. Think Ahead

Do your clients have health or mobility issues? Do they want to be close to family members? Consider other changes that will impact their choice in homes.

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