These 4 Trends Show The State of Today's Real Estate Market

Regardless of how deeply invested you are in real estate, it’s important to understand the market’s trends. We have certainly seen an unusual market this year, creating great opportunities. Take some time to evaluate the opportunities these four trends offer to determine if now is a good time to act.

1. Increasing Home Prices

Everyone who invests in real estate wants to see their property’s price increase over time. Between 2020 and the first half of 2021, we’ve seen a perfect storm of factors, driving up prices.

In June 2021, the CoreLogic National Home Price Index was up by 17.2% year-over-year. This has created an environment where if it’s time to sell your house, you will likely have a handsome profit.

2. Increasing Home Equity

Your home equity is what you actually own of your home, compared to what you owe. Your mortgage principal doesn’t go up over time unless you refinance or take an equity loan, so your equity shouldn’t fall. Every time you pay your mortgage, your available equity increases slightly.

However, when the market price of your home increases, it’s like making a significant deposit on your equity. If your principal owed doesn’t change, then when the market price of your home increases, that goes directly into equity.

You have two ways to liquidate this equity. Either sell your house or take a loan against the equity. If real estate investing is something that interests you, this may be a good time to liquidate some of that equity to invest in one of the homes for sale in Long Beach.

3. Inventory Shortage

Inventory availability is a significant influencer of home prices in any market. Like any other product, an increase in inventory lowers prices, while less inventory increases prices.

The last year has had a significant decline in people attempting to sell their properties. This is in part spurred by the moratorium on evictions, federal mortgage and rental assistance, and the stay-at-home orders across the country.

There has also been a decline in new constructions, spurring on the inventory shortage. While construction has been able to get moving again, there is a backlog of inspections across the country. These backlogs delay available new homes and prevent additional inventory from hitting the market.

More people are also opting to keep their current property and rent it rather than selling it. While this creates a great income opportunity for them, it also spurs the inventory shortage.

4. High Real Estate Demands

The shortage has been met with equally high demand to purchase homes. High demand and low inventory together make prices go to the moon.

Not only are current market values high, but many sellers are also seeing bidding wars for their property. Sellers have more offers to consider, leading bidders to compete to close the deal. In many cases, this leads to offers higher than the asking price for a property to attract the seller’s attention.