INVESTORACTIVITYAT PRESENT Another indicator of the housing market is investor behavior. Investor activity has definitely picked up. More and more investors are likely to enter the real estate space. Along with the local investors, we’re seeing iBuy- ers and institutional investors flood the space. That’s because the risk of perceived inflation is high and real estate is a good inflation hedge option.
Right now, there’s no bubble to pop.”
Known Flipper Purchase Percentages of Total Home Sales 2018-2021
Furthermore, it will take some time to make up for the supply gap between single-family home constructions and household formations. Between the beginning of 2019 and June of 2021, the gap increased from 3.84 mil- lion to 5.24 million homes. Builders are playing catch-up, so it will take years to sort out the lack of inventory. 2 LOCK IN THESE MORTGAGE RATES WHILE THEY ARE STILL LOW It’s about the cost of owning and your monthly payments—not the value of the house. Home prices over the past 50 years have steadily increased. This is irrespective of interest rates, which have gone up and down during the same time period. There are talks of the Federal Reserve increasing interest rates as soon as next year to combat inflation. Securing a mortgage at the current rate offers a chance at a lower monthly mortgage payment than if you wait. THERE’S STILL REASONTO BE OPTIMISTIC ABOUT REAL ESTATE Bubbles will always be around. Every generation has its own bubble-forming behavior around a new trend. Does this mean there won’t be another housing bubble? Probably not. It’s always a possibility that with a combi- nation of low mortgage rates, a housing supply crunch and Millennials coming of age, things will get out of control. However, it takes a long time for demographics to work their way through.Millennials are going to remain a strong force in the housing market for the next 3 to 4 years. It also takes a long time for builders to ramp up supply. With continued demand along with other factors, there’s plenty of reason to remain bullish on real estate. •
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TWO TIPS TO SUCCEED IN THE CURRENTMARKET
You layer these factors into a housing landscape where inventory hasn’t kept up with demand for a decade, and you have a hot market that will only get hotter. Here are our tips for the current real estate landscape: 1 GET IN NOW There is a 3- to 4-year lag on new construction so the inventory scarcity isn’t going anywhere. Although new permit filings have increased, it doesn’t guarantee that new homes will materialize. Not every permit filed trans - lates into a construction start and not every start will become a completion. In other words, it will still take a long time for new construction to catch up.
Polina Ryshakov is Sundae’s Sr. Director of Research and Lead Economist. She has more than 15 years of valuation experience across commercial and residential real estate.
80 | think realty magazine :: december 2021
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