The slowdown in the housing market may not be as bad as it seems, or at least, that is what some experts say. Real estate companies reported a decrease in their sales during the last months of 2015. This is allegedly due to the low confidence and hardships of nowadays consumers as prices are rising because of the high demand in urban areas. They seem unwilling to pay the prices. You must take this into consideration if you are planning on buying a house in the future.
During Market Watch 2016, Denny Grimes, president of Denny Grimes & Co. said that it was a good thing that they were in the middle of a downshift as the market was changing dramatically. He was accompanied by other two experts who agreed with Grimes about the situation regarding the present and future of real estate business.
Is the price right?
Even though it is true that people will always need houses to live in, economy and society might be moving in a new direction. Possibilities of acquiring a new house are much harder now, and this makes people change their priorities as the effort and money involved are more significant. This is especially a hard decision if you are a first-time buyer if that is the case you will probably look for something not very expensive, however, this creates important limits in your alternatives as not many areas still have such affordable houses.
According to Mr. Ryan of Equity Realty, the average price of houses is higher than ever, and people are aiming to get the largest house they can get with their money. That is why certain areas like Naples, Florida are becoming more popular as you can still afford a new house for about $300,000 which is the average price for apartments in other less demanded areas.
You are not the only one moving, your schedule too!
Another important element that you as a potential buyer should take into account is the way you would have to commute to your workplaces because the distance and the flow of traffic may affect the time you spend doing this. In some cases, you might even need to buy a vehicle to move around. The cost of transportation may change if you decide to move to a different area so you must have this in mind in order to make the best decision you can.
Why is the housing market changing?
Lower housing sales are directly caused by the increase in prices over the last few years, however, this might actually be beneficial for you as there will be more options to choose from and companies will feel compelled to lower the prices in order to increase the sales. This is one of the reasons why construction companies are more interested now in condominiums and apartment buildings, so they can offer cheaper alternatives.
However this is not the case when it comes to luxury homes as this market doesn’t seem to be affected by this tendency. Surprisingly, sales of houses with prices higher that 5 million USD increased as well as houses around one million USD. Demographics interested in this kind of property are apparently not affected by the hardships that prevent average people from getting a property of their own.
What is the construction industry doing about it?
Due to this situation, apartment buildings have had an increasing popularity as they are much more affordable than a house, and they are commonly located in more populated places. On the other hand you should also have in mind that apartments are quite different from houses, not just because of the size, but also the space around, the neighbors and the parking may be an issue for some people.
While the house construction industry is decreasing, the apartment construction rate increases exponentially, as the number of new buildings this year is twice as much as the last one. Apparently this is due to the fact that newly graduated college students and young people, in general, are more interested in this kind of household because it is more easily affordable and it fits their desired lifestyle better.
There are some exceptions, though.
Prices are quite different depending on the area you want to live in, however this seems to be an irregular factor to real estate companies as some people are more interested in buying a house in specific areas regardless of the price or the size of the property while others pay much more attention to either the price or the size.
On the other hand, they seem to have a harder time when it comes to buying a new house, as their pension plans may not be old enough or they lack the needed funds to ask for a loan to pay for it. If this is your case you may think you can wait until you fulfill all the requirements needed to buy the house you want, but then you must have in mind the fact that prices will keep changing through the years and this may or may not be beneficial.
Some places are more difficult than others.
It is also true that there are certain areas where construction permits are more difficult to obtain, more expensive or both. This causes prices and demand to rise as fewer houses and apartments become available in such areas making it more difficult for some people to buy any kind of properties there. You can assume that this not only affects people who are trying to acquire a property but also the construction companies as this forces them to increase the final price of the properties they are trying to sell.
It is obvious that the construction industry will continue to rise alongside with the population growth, however, it is the way it evolves what will actually have to change to adapt to the new generations and the fluctuating economy. You must analyze very thoroughly all the possible choices you have and compare all the pros and cons before you make a final decision, but if you choose to buy a property be well aware that it will be for your own well-being. Buying a house or an apartment is one of the biggest investments you will do in your entire life.