There are distinct signs that the U.S. residential real estate market is improving, say experts like the Corcoran Group of New York City. There appears to be a trend, in 2016, towards moving away from high-priced markets like the West Coast and Northeast, and a migration to currently booming markets like the South and Midwest regions.
Residential real estate buyers are moving away from bigger cities and into small to medium-sized markets like Winston-Salem, North Carolina. Job growth is making strides, little by little, and so, commensurately, the for sale signs are coming down. But will the trend last? Here are 5 signs it will:
1. A 13.4% increase in nationwide building permits
From January to July 2016 there was a 13.4% increase in the number of building permits issued in the U.S. The rate for the Midwest shot up by 20.4%. This is happening at the same time that overall housing inventory is down by 4.4%, which may be an indicator of new resolve by prime movers in the real estate market to kickstart what has been quantitatively slow growth since the real estate market implosion of 2008-09.
2. Price increase being tempered by continuing low interest rates.
Sluggish interest rates at the Fed continue to cap price inflation in the housing market in the U.S. But, even if the Fed were to raise rates by the predicted quarter-percent or so, it wouldn’t affect buyers’ confidence in the market, says Ralph McLaughlin, a housing economist for Trulia.
3. Buyers flocking to “bargain belt” in the South and Midwest.
Continuing high prices in the West and Northeast are driving home buyers of all ages to more affordable markets, where the price gap can be as much as 400% and more. With the median price for residential housing at $599,000 in New York City, places like Winston-Salem, NC are enjoying a median home price of $130,000. Moline, Illinois is sporting a $95,400 median home price, and sales are up — though, along with predicted price hikes to go with it.
4. With inventory low, millennials are saving money as they work and live at home.
This could be a very good sign of growth in the housing market in coming years. Millennials are consolidation housing, either by having been priced out as they scramble for jobs in a tight labor market, or by being stymied by low housing inventory.
With more building permits being issued, and suburban construction inching ahead, millennials will be buying houses once inventory and financial gains are made. According to U.S. News & World Report, millennials are dominating the housing market and are ambitious about eventual home-buys.
5. Builders aiming for more cost-conscious price points.
As the economy has deflated, many builders are realizing that their values have had to change, to attract more buyers at a decidedly lower price point. This has included smaller home constructions, and the use of both cheaper and more environmentally-friendly materials. This has helped keep a slow but steady pace, turning over residential home sales, and aiming for what 21st century buyers are looking for. Also, fewer millennials are having families, and so can handle living in smaller dwellings.
Jodi Bakst, Broker-Owner of Real Estate Experts based in Chapel Hill, NC, is known for her internet marketing skills and bringing the best service and systems to her buyers and sellers