6 Millennial buyers: According to year end reports for 2019, 37% of home buyers were actually millennials. The greatest difference with these buyers is their use of technology to search for properties and their preference toward texting about everything from setting up showings to negotiating. If you’re not up to speed with the best real estate apps and used to texting, you may be missing a large piece of the market. Also don’t assume they’re in the bottom of the price ranges you work… According to an article in Realtor Magazine, they’re increasingly skipping the starter home and immediately going for something bigger and more expensive. One-third of millennials who purchased homes in 2018 paid $300,000 or more, a steep step up from the $150,000 to $250,000 most buyers plunk down for their first purchase in previous years.
7 Instant Offers: They’re not going away. Look for start-up iBuyers such as Knock, Offerpad, and Opendoor to seek additional funding rounds to fuel their entry into new markets (all three raised millions in 2019). The increasing adoption of iBuyers in the residential space may also lead to the development of faster and more automated leasing and buying platforms on the commercial side.
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Do you or your company offer something to compete with iBuyers? Express Offers, eXp’s platform, enables agents to submit their sellers’ homes to several institutional investors who can make an instant cash offer. The agent can submit the home to more than one investor and potentially yield multiple cash offers for their clients to choose from, unlike most other programs that allow only one instant offer at a time.
EXP believes it is the most agent-centric instant offer platform because agents remain at the heart of every transaction as well as have additional opportunities to engage with home sellers. eXp agents also can introduce new institutional buyers to the Express Offers platform and earn a percentage of the transaction fee each time that buyer successfully closes a deal.
8 Investor Incentives: According to the Economic Innovation Group (EIG), “as of October 2, 2019, 115 listed funds have identified affordable and workforce housing, as well as community revitalization, among their investment priorities—a nearly four-fold increase since the beginning of 2019.” Most of these developments are focused on providing affordable housing for wage earners who make around 40% to 70% of the area median income.
From Liz Brumer-Smith of Motley Fool: As construction and development for investment projects in Opportunity Zones (OZ) begin, I expect more private firms to follow suit. We are already seeing a growing number of private companies outside of OZ investment areas focus their efforts on constructing new housing projects, converting existing housing into affordable housing, or creative new adaptive reuse projects, where they convert old, vacant buildings like factories, schools, and office space into residential housing.
9 Bifurcation: Bifurcation means that something is not all the same; that it has two or more parts, acting in different ways. The story in 2020 will be that what happens in your neighborhood will not match what happens in your friends who lives across town, across state or across country. You must study your ‘subject property’ more in depth than in previous years to understand pricing, both for your buyers and sellers.
“Our data shows that the divergence between different markets in the country is greater now than it has been at any time since the crisis,” said Jeff Tucker, an analyst for Zillow’s economic research team. “For several years — from, say, 2015 to the beginning of 2018 — it was essentially a seller’s market almost across the board. Whereas now, it’s still a seller’s market in Phoenix, but certainly not in Chicago, for instance.”
“I think that in 2020, we will see a lot more nuance, or if you want to call it differentiation, between the various markets, especially since we’ve had roughly eight years, you know, a decade really — of a rising tide lifting all boats,” echoes George Ratiu, senior economist for realtor.com.
According to Forbes, there will be 5 distinct patterns to 2020.
-Stalled out major urban areas on both coasts.
-Job meccas and university towns will thrive.
-Cold cities with big tax burdens continue to slow. (Chicago, Baltimore, Hartford)
-Sun belt, urban havens to thrive.
-2nd tier cities with under the radar urban growth will still do well.
10 Know your stuff: Clearly, 2020 will be different for different people in the real estate space. In the past decade, you could gamble with pricing over the last best comp and usually get it. Sellers could push buyers around and expect bidding wars, not much hassle with inspections and rake in a nice profit. In some areas this will remain true, but clearly not everywhere and not at the same rate. Many cities have seen a 25% price increase over just the past 5 years. While no one is predicting that this will continue, no one is predicting a housing crash either. Know your stuff…your numbers, your trends and modify your practice to meet the needs of what’s happening locally!
Also read: Podcast: What To Expect In 2020? 10 Key Points!, Apple Steps Up to the Plate with Google and Facebook to Confront CA Housing Crisis, “Agent-Free” Sales for RedfinDirect Listed Houses in Los Angeles