The third quarter of the year has brought a few surprises to the housing market so far, including a slight dip in mortgage rates and signs of falling home sales. And while this is happening, here are 6 long-term trends you should know.
1) UNDERBUILDING: The U.S. has been under-building for a decade. Builders are lowering production as interest rates rise…when we should be expanding it!
2) NEXT GEN BUYERS: 130 million Millennials and Gen-Z-ers are either entering or have already entered prime household formation age.
3) WEALTH TRANSFER: Over $10 TRILLION in wealth will be transferred in the next decade in the United States alone.
4) INFLATION: Even with 2% inflation, the cost of building a new home continues to rise.
5) MORE BUYERS: Wealthy Baby Boomers are purchasing two and three homes. Private equity is buying homes that were previously bought by individuals.
6) REPLACEMENT: Repairing and replacing existing homes due to extreme weather and an aging housing stock will undoubtedly consume a large number of resources that could be used to develop new homes.
So, what does this all mean for real estate investors? While some people are obsessed with short-term trading, keep your eyes on long-term investing!
