The real estate market in the United States is going through a period of major transformation. Digitalization and virtual staging have seen a tremendous rise in demand, with searches for both increasing by more than 200% in the last five years. Zillow, a popular online real estate database, has experienced a 51% surge in searches over the past decade. On the other hand, Nextdoor, a social network for neighbors, has seen a 186% rise in searches over the same period.
The COVID-19 pandemic has caused many people to move away from large cities and into suburbs, and this trend is likely to continue for the next three to five years. Eviction searches have also increased by 41% over the past 15 years, highlighting the struggles of low-income landlords and tenants during this time. The Sun Belt region of the United States, which stretches from California to North Carolina, has seen an influx of people due to its warmer climate and lower cost of living. However, despite this influx, the total housing supply remains limited as those who bought homes in recent years with extremely low mortgage rates are staying put. This shortage of inventory has prevented prices from dropping significantly, making housing unaffordable for many. Mortgage rates have shown signs of easing and are now less than double what they were a year ago.
Home prices have also started to drop slowly, making it difficult for many homebuyers to access affordable housing. Total sales of existing homes decreased by 1.5% from November to December, marking the eleventh consecutive month of declining sales and 34% less than a year ago. Despite this decrease in sales activity, housing supply remains stagnant near historic lows, which has kept home prices rising. Industry experts predict that it will take some time before inventory is normalized. Single-family construction increased by 11.3% in December while applications for building permits dropped by 6.5%, according to preliminary data from the US Department of Housing and Urban Development. Economists predict that the housing market is more likely to correct itself after the double-digit percentage increases seen in house prices in recent years rather than falling.
However, some experts believe that home sales and prices in some areas could increase due to their affordability relative to median income. Buying a home in any market is a very personal decision and it's important to have a strong financial position before taking the plunge. Use a mortgage calculator to calculate your monthly housing costs based on your down payment and interest rate. Rather than waiting for much lower prices, experts suggest buying a home based on your budget and needs. If you find a home you love in an area you love and that also fits your budget, it's probably right for you. However, if you make too many sacrifices just to get a home, you can end up with buyer's remorse which could force you to sell the house. When selling your home, it's important to find a real estate agent who knows the area and is highly recommended.
A good agent will work closely with you to set a competitive price for your home while responding to questions and offers from prospective buyers. It's also beneficial to invest some capital into renovations and repairs as this can go a long way towards presenting your home in the best possible light.