Introduction

The real estate industry is a very diverse industry. When most people think of real estate, they think of residential real estate (homes), but it also includes commercial real estate (businesses), and even land. However, because residential real estate is so popular at the moment, here are some trends that are happening right now.

#1: Real Estate Prices and Affordability

According to the basic principles of supply and demand, if there are more available homes but not enough home buyers, then the prices of homes will eventually drop. On the other hand, the opposite could happen with the price of housing increasing if there’s a high demand, but a limited supply of available homes (called a seller’s market). Currently, the latter has been happening in recent years, with the median home price being around $345,000.

While it may seem like the cost of housing being on the rise means that houses are no longer affordable, that isn’t always the case. If interest rates are decreasing and people’s incomes are increasing, then it is very possible that housing is still affordable— at least for most people.

#2: Housing Market Cycles

The real estate market is known to go through cycles, as clearly shown by the 2008 housing market crash caused by the recession. The COVID-19 pandemic of 2020 has really affected the economy, and even though we are out of a recession, many people fear that the same thing that happened in 2008 will happen again. Fortunately, this is not likely to happen due to the fact that lending standards are much different than they were back then.

In contrast to last year, this year there have been more houses becoming available to buy. The demand for houses has also decreased, compared to last year— which is most likely due to the COVID-19 pandemic. Mortgage rates on 30-year mortgages have remained below 3% at approximately 2.8%. In addition to all of this, the price of many homes are dropping, compared to last year.

#3: Real estate investors are investing even more.

Due to housing prices decreasing from last year’s prices, mortgage rates being lower and the overall demand for houses going down, real estate investors have jumped on the home buying bandwagon. They are either buying homes to let them appreciate in value or buying them to rent out to other people to earn money. Real estate investors also have the option to buy older homes, renovate them, and then put them back on the market to sell at a higher price (called flipping).

#4: More people are renting houses instead of buying them.

Currently, it is a buyer’s market in the real estate industry, versus a seller’s market. However, this does not change the fact that more people are renting homes instead of buying. This is good news for those real estate investors who have recently bought homes. This means that there are people out there who are willing to rent homes and are not interested in buying them.

With all of these trends in real estate currently happening, it is a good time to look into investing in real estate. You don’t have to be a millionaire to make this a reality, nor do you have to be a seasoned investor. There is a lending company that specializes in rental property loans, and can also help you to grow your investor’s portfolio.

Conclusion

The bottom line is that now is a good time to invest in residential real estate if you have ever been curious about it. Residential properties include single-family homes and multi-family homes, but not apartment complexes. Though the housing market looked pretty bleak during the height of the COVID-19 pandemic last year, things are looking much more favorable for buyers this year. Buying a residential property and then renting it out to others is a good way for you to not only earn passive income but also diversify your investment portfolio.