From the middle of 2020 to 2021, the housing market has gone downright mad. Houses have been selling for 20%, 40%, or 100% over their listing price—depending on the market. However, as of August, 2021, things are turning around. The eviction moratorium has ended.
That’s going to mean a few things for the housing market. Housing prices are going to drop. Interest rates are going to rise. In point of fact, there’s an inverse relationship between the two. As interest rates rise, housing prices drop. The eviction moratorium is going to force this relationship.
For around eighteen months, landlords were losing money on tenants—those who couldn’t get some sort of government payout, at any rate. Accordingly, with moratoriums ended, many landlords are evicting tenants and flogging off properties. Collaterally, real estate investors are buying them up.
Meanwhile, on either coastal area in the United States, people are leaving in droves. Young people, old people, families; all of them are descending on Texas, Arizona, Nevada, Idaho, Colorado, and much of the midwest. Here, we’ll explore how a few of these trends are going to impact the real estate market as 2021 continues, and into the future.
1. The Bubble Is In The Process Of Bursting
Mortgage moratoriums are freeing up landlords, and they’re selling properties to get money back on their losses. Accordingly, apartment buildings and single-tenant properties are hitting the market like the market insulted somebody. They are hitting that market hard, and the result right now will likely be reflected in terms of investors.
Real estate investors understand what’s going on, and they’re buying up properties left and right—especially in small midwestern states like Wyoming or South Dakota. Some of the buyers are coming from the coasts, buying homes for a fraction of the cost similar properties would command in their home states.
A home worth $1,000,000 in L.A. is like $250k in Wyoming. The $250k property in the midwest will likely have more land, be newer, more modern, and more “livable” than the million-dollar west coast property. Coastal properties are overpriced, people are leaving, and they’re finding deals in the midwest.
Since many millennials these days work from home owing both to COVID-19 and technological convenience, no longer are they forced to move to “where the jobs are”. They can move where housing is affordable. Since moratoriums are over, that means they’re buying up the “deals” wherever they can.
2. Coastal Cost Reductions, Midwest Spikes
Many have left New York City, New York state, Los Angeles, San Francisco, and San Diego. On the east coast, they’re heading down to Florida, Nashville in Tennessee, and varying cities in Texas. On the west coast, they’re heading to Las Vegas, Nevada, Phoenix, Arizona, and Austin, Texas. Accordingly, property values on America’s bookend coasts are dropping.
Likely, this cost reduction won’t fall so far so fast as to be eminently comparable to midwestern property values. However, by the time this “great reset” has run its course, you’ll likely see such properties cut in half as far as value goes. It will depend on the community, certainly, but expect midwest spikes and coastal declines in property value.
Millennials are the largest buying market right now, and they’re leaving areas that are just too costly to feasibly inhabit. Those staying are boomers, the elderly, and “Generation Z” members living in Generation X households.
Generation X is likely staying put for the most part; except those who have the latitude to uproot themselves. Millennials are moving the most.
If you are thinking about selling your home in a buyer’s market, make sure you do the proper research in your area and determine if it’s truly the right time to sell. There are some advantages to selling in markets like this, but you need to give yourself the proper knowledge or hire a real estate agent that knows what they are doing.
3. Tiny Homes And Van Life Are Poised To Expand
The “van life” trend has been very popular since around 2015. When COVID-19 hit, this trend became more popular than ever, and that holds even in August of 2021. Expect many millennials to invest in vans, RVs, fifth-wheel trailers, and tiny homes in 2021 and into 2022. This sort of trend is to be expected for several years going forward.
4. Costs Drop As 2021 Ends, Into 2022—Depending On Region
The west and east coasts should see property values take a dip toward the end of 2021. Remember, the housing market lags the economy owing to the time and complication involved in property acquisition. So expect the “ripple” effect to continue in terms of cost reduction well into 2022. However, some regions won’t see this effect.
Idaho is seeing massive spikes in housing prices, so is Colorado. Even Rapid City, in South Dakota, is seeing unrealistically high values for properties. People are moving, and though the market bubble has, in a larger sense, burst nationally, that won’t stop people moving. Especially in California, where secondary lockdowns are in effect, people want to leave.
5. Texas Is King
Californians and New Yorkers are flocking to Texas in droves. If you can’t find a house right off the bat, you may well want to explore this popular Dallas apartment website to find an area where you can “tread water”, as it were, while you look for the perfect property.
Now Is A Fine Time To Buy
Expect Texas to take off economically, perhaps replacing California when the dust settles. Expect costs to drop substantially into 2022—but only in certain regions. Less popular states will gain in popularity, traditionally popular states will see losses, and some states will reign—like Colorado, a state popular before, and nowhere near a bubble burst yet.
Owing to millennial influence, it’s to be expected tiny homes and the van-dwelling lifestyle will continue to expand as they already have been. The midwest will likely spike in costs, America’s coastal bookends will see a decline, and the bubble is expected to continue sequentially bursting dependent on the region during this time.