ere are a lot of reasons why real estate is in demand right now. Those reasons include rising interest rates, the COVID-19 pandemic, and the pent-up market from lockdowns. The key is to know what each of these is so that you can make the most of your property.
Pent-up demand from lockdowns
The real estate market has been on a roller coaster ride. After a year of solid performance, it started to dip in March. But a few things have happened to make it look like the market could continue to climb. Among them is a new wave of lockdowns.
The first one, which ran from March to June, damaged property sales. It also slowed the conveyancing process. But several states are easing restrictions.
The second national lockdown, which began in September, has already brought some improvements. It has also given people more time to mull over their options. Some families are planning a move over the summer months before the start of the new school year. Some developers are also looking to take advantage of the pent-up demand.
The Stamp Duty Holiday, which runs from March to the end of April, has boosted the number of prospective buyers. This is good news for homebuyers who can take advantage of a reduced rate or no stamp duty on homes valued below PS500,000.
Rising interest rates
A 1% increase in interest rates could lead to a windfall profit in the right housing market. It has been known that higher rates reduce affordability and that pent-up demand can sustain the price of a home for a while.
The Federal Reserve, in particular, has been aggressively raising interest rates as part of its efforts to slow down the economy. They hope this will discourage consumers from spending too much money.
Many factors impact the real estate market, from supply to demand. While this is not an exact science, a few factors are commonly cited.
The best way to determine if interest rates affect the real estate market is to look at mortgage application volume. If they increase, you’ll likely notice a drop in applications, which could mean fewer buyers competing for homes.
A 3% decline in mortgage applications suggests that demand is lower than it once was. As such, prices for homes are likely to go down. However, if you’re in the market to buy a new home, you’ll want to ensure you get approved.
While some real estate industry players are rethinking their strategies and portfolios, Peter Hungerford is leveraging digital strategies to increase tenant retention, attract new tenants, and help them navigate the tenant experience. In addition, all companies are working hard to navigate the immediate and longer-term effects of the pandemic.
For starters, the market has become tighter due to the virulent disease. In addition, the market has seen a sharp decline in the number of new projects and construction activities. This may continue through at least the next few quarters. The impact of COVID-19 on the market is difficult to gauge, however.
One major factor driving the housing price spike is the shift to remote work. As a result, rents and house prices have become more similar. In addition, those who can work from home have been able to move to more affordable neighborhoods and cities with better amenities.
This may account for half the national house price increase since November last year. In addition, economists estimate that the continued evolution of work-related housing demand will play a role in future house price growth.
The real estate market has a significant mismatch between supply and demand. This is causing the prices of homes to continue to rise, although they are expected to stabilize in the second half of this year and the second half of 2022. The reason for this mismatch is chronic under-building. This is occurring due to a lack of experience with market demand and the inability to value engineer houses. The supply-demand equation is a simple law that explains how the interaction between supply and demand affects the price of a home.
The supply-demand equation demonstrates that demand for a home increases when supply is low and vice versa. As a result, the market has been flooded with millennials and other potential buyers. While this is good for the economy, it has created a massive mismatch between supply and demand.