- Millennials represent a large potential pool of first-time homebuyers ready to enter the 2021 market.
74 million millennials comprise a huge demographic of consumers ripe for buying their first home, surpassing the impressive number of baby boomers who burst onto the home buying scene in the 1970s and 1980s. Forbes reports that the average household income of this group of potential homebuyers is $88,200. Considering that the average group of homebuyers from this generation is now of age earning a decent salary, many economists believe that millennials offer salvation for a slowing home market in 2021.
- Conventional loan requirements have gotten less stringent, making it easier to buy a home today than in recent years following the Great Recession of 2008.
Underwriting guidelines have loosened a lot making it easier to buy a home today. The way conventional lenders have encouraged home buying is by lowering the down payment required along with the credit scores to qualify. Lenders are also allowing for higher debt levels. Many borrowers who were turned down in the past can now obtain a mortgage through conventional lenders.
Given the upswing of rental prices, first-time homebuyers in particular benefit from lower down payment requirements and more liberal debt ratios. While getting a mortgage loan is not as easy as it may have been prior to the Great Recession that started in 2008 or so, the mortgage landscape is much more welcoming today than four or five years ago.
- Foreign buyer investment is down due to tax law changes.
Since the new tax laws came into effect in 2018, many foreign buyers have stopped purchasing homes in luxury marketplaces such as New York and California. A majority of these buyers were from Europe, China, and Latin America.
Politics do have a significant impact on the real estate investment market in particular. Another reason for the foreign investment slowdown can be attributed to China’s earnings and income figures cooling down. Tariff policy and the political mood of investors play a role in foreign demand.
- Lower-priced homes are in high demand, often receiving multiple offers.
While higher-priced home sales have slowed, lower-priced homes have not. With millions of millennials finally ready to enter the market and buy a starter home, this demand keeps the competition steep. Another contributing factor to a shortage of modest homes is that older people are deciding to stay in their homes longer. The New York Times reports a decrease in housing inventory, with the number of affordable homes falling by eight percent.
- Mortgage rates are expected to remain lower than five percent for the near future.
Low and stable mortgage rates stimulate the real estate industry. While it is impossible to know for sure how long this trend will continue, there is little evidence that the rates will spike, especially since we’re approaching a major election.
HBI reports that both the Mortgage Bankers Association and Freddie Mac economists expect the 30-year mortgage to average between 4.3 and 4.4 percent for the remainder of 2019. This is good news for the real estate industry that is extremely sensitive to mortgage rates. There is nothing that discourages homebuyers’ enthusiasm, like rising mortgage rates.
- Second-tier cities are experiencing significant growth as homebuyers search for more affordable buying options.
Forbes reports that the trend of looking to secondary options instead of spending so much in major housing markets is expected to continue through 2021. Many major corporations have driven this trend by relocating corporate offices to affordable locales. An example of this type of recent move is Toyota moving out of California to establish a Dallas office.
- Realtor.com reports that the hottest housing city markets are in Lakeland, Grand Rapids, Miami, Boston, Phoenix, El Paso, Chattanooga, Boise City, and Bridgeport.
The cities that are hot in real estate in 2021 can change status quickly as market conditions shift. A seller’s market can become a buyer’s market almost overnight.
- The competitive housing landscape has fueled amenity-rich apartments as a way to beat the competition.
Today’s finest multifamily developments boast movie theaters, communal gardens, laundry service, and even coworking space in many cases.
- Home staging has become big business.
Decluttering is key for getting the best price for your home when it is time to sell. There is proof that sellers get substantially more if they stage their home.
- Video marketing is here to stay.
Buyers expect to see videos of the homes they want to buy. Thus, video marketing and virtual tours are a necessity.
- Builders have segmented the market
Developers have primarily segmented the market into premium affordable and affordable homes. In recent times these segments have witnessed strong latent demand, thereby increasing the supply and giving more Indians the opportunity of owning a desirable home.
#2. Builders are more eco-conscious
From procuring raw material to adopting sustainable designs and technologies, builders have now become more eco-sensitive and environment caring. It is estimated that investments on clean and green technology has almost trebled in the last ten years.
#3. Builders are targeting non-metros
With the emergence of start-ups and a rise in the presence of multinational companies in the country, the disposable incomes have also grown considerably in the last decade or so. This has compelled developers to shift their focus from traditional markets like Mumbai, Bangalore, Delhi to new markets like Pune, Hyderabad, Chennai and Coimbatore.
#4. A second home was no more a dream
In the last ten years, the residential market was bolstered by the emergence of destination homes and vacation homes. Home buyers are now more open to the idea of investing in a second home when there is a good price proposition on offer. This trend In the last ten years, the residential market was bolstered by the emergence of destination homes and vacation homes. Home buyers are now more open to the idea of investing in a second home when there is a good price proposition on offer. This trend also attributes to the growth of residence-management companies which undertake both long & short-term contracts for these buyers.also attributes to the growth of residence-management companies which undertake both long & short-term contracts for these buyers.
#5. Click on the brick
The concept of buying/selling a home online was a far-fetched reality around ten years back. Established developers with a good reputation and goodwill in the market have promptly jumped on the e-commerce bandwagon to take the omnichannel route to buy/sell houses.
#6. Homes got smarter
Connected homes or smart homes which come with interconnected devices that use Internet and remote systems to provide a superior living experience to homebuyers have captured the imagination of customers in recent times. These products combine delightful features like comfort, entertainment, mobility and security, providing consumers with connected solutions all the time. According to industry estimates, the Indian smart home market is currently valued at about $893 million and is expected to grow by leaps and bounds in the next five years showing penetration of 9.5 per cent of homes by 2023 compared to 0.8 per cent in 2018.
#7. Community homes
Living has seen a significant tectonic shift during this period as people with like-minded interests and preferences came together to fulfil their desires. Builders have responded well to these communities by designing living spaces around their requirements. Eg. Senior Citizen Homes, Apartments wings for single women, single owners.
#8. Proptech is the new mantra
In the last ten years, the real estate industry witnessed a strong integration of digital and automated technologies like Data Analytics, Data Mining, Artificial Intelligence, Virtual Reality and Machine Learning. Developers have now shifted their focus towards customer centricity and customisation to meet the ever-evolving desires of the home buyer.
#9. Booming millennials
Millennials (born between 1980 – 1996) were/are in their mid-twenties. With the advent of internet, exposure to better education and varied career aspects, these millennials have changed the lifestyle landscape of India. With high incomes and aspirations, they have become very particular about investing in a new home, and this has given us developers an opportunity to sharpen our strategy and outreach.
#10. RERA brings in a new era
With the introduction RERA, the end user had easy access to property related data and information, creating a transparent interface, which ultimately helped boost their confidence. RERA has not only brought back confidence in the end users but also given the customers better clarity to make an educated decision towards one of the most important decisions of their lives, buying a home.
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