The housing market has been gaining strength in the last few years -- particularly during the COVID-19 pandemic. Home values soared, buyer demand jumped, and mortgage rates hit historic lows. And ultimately, it’s made housing one of the few bright spots during an otherwise difficult time.
But the housing market is always in flux, and real estate trends come and go. Throw in that this industry is highly localized, with different conditions in every city, state, and metro area, and you can’t bet on things staying stagnant for long.
With that in mind, here are some of the top real estate trends going on across the country right now, specifically those impacting investors, house flippers, and rental property owners.
1. The rise of short-term rentals in non-touristy areas
Beachfront rentals will probably continue to bring in the travelers, but if you’re investing in new properties, don’t count the off-the-beaten path places out just yet. Multiple reports have shown an inclination toward more rural and small-town locations lately, particularly spots within driving distance of major cities.
When you throw in that vaccines are starting to be more widely spread, you can expect more and more Americans to start visiting loved ones they haven’t seen in a while. This will likely mean an uptick in more localized travel, not to mention longer stays (especially if remote work arrangements stick around).
2. Foreclosures offering less bang for their buck
Thanks to the various bans in place, foreclosures are a lot harder to come by these days. And when investors can find them? They’re offering less of a bargain than they have in years past.
It’s true: According to a report from foreclosure marketplace Auction.com, foreclosed properties are now going for about 86% of their market value. That’s the highest price-to-market-value seen in over six years. In some states, that number jumps to the 90th percentile (Georgia, North Carolina, Arizona, Tennessee, and Virginia).
It’s just another reason to be extra careful when buying a distressed property. Make sure you’re estimating repairs accurately, and know what you can flip the home or rent it for on the open market. And remember: Stick to the 70% rule.
3. A focus on sanitation and cleanliness
With the pandemic still raging on around us, amenities that offer a cleaner, more sanitary environment are hugely in-demand -- no matter what kind of property you own.
In short-term rentals and flips, that means things like hands-free faucets and whole-house air filtration systems. In multifamily properties, it looks like posted cleaning schedules, touchless elevators, and large-scale disinfecting efforts. For some Airbnb hosts, it even includes offering vaccine discounts.
4. More demand for home offices and at-home entertainment
The pandemic has forced Americans to spend more time at home than ever. They work, play, and take classes there, and many have been quarantined in their properties for months due to surges in local infections. For these reasons, increased health and work amenities are reigning supreme, both with buyers and renters.
The No. 1 amenity is a home office — or even just a dedicated work nook. With nearly 42% of people still working from home, a private, tucked-away area to focus or conduct Zoom calls is absolutely critical to most American households.
At-home health and entertainment amenities are next in line. Think home gyms, pools, and hot tubs, as well as things like theater rooms and video or board games. The latter items are especially important in short-term rentals, as many travelers are opting for longer-term, quarantine getaways these days.
5. A continued exodus to the suburbs
If you’re looking for that next flip, think about venturing out from the bigger metros and heading into more suburban and rural areas instead. Many Americans are tired of the cramped spaces and higher infection rates seen in urban areas and are opting for more spaced-out locales these days -- particularly when buying homes.
If remote work arrangements stick around, this exodus is only poised to continue. As Danielle Hale, chief economist at Realtor.com recently put it, "Even before the pandemic, homebuyers looking for affordability were finding it in areas outside of urban cores. The pandemic has merely accelerated this previous trend by giving homebuyers additional reasons to move farther from downtown."
The bottom line
As with most things, the real estate market is always in flux. But staying on top of those changing trends? That’s critical if you want a strong and profitable portfolio.
Need help doing that? Check back here every month for the latest real estate market trends and data.