The housing market has reached the high risk/high reward part of the cycle, and John Burns Real Estate managing principals Ken Perlman and Lesley Deutch call out the opportunities that can lead to those rewards
Risk: Inventories are at all-time lows resulting in massive home price appreciation that is threatening affordability. Public builders have 10% fewer communities to sell from than during this time last year, and the number of inventory homes for sale in actively selling neighborhoods is dwindling. Resale home inventories are down 45%. The result is historic home price appreciation.
Reward: Many buyers are prepared to spend more money. Consumers made $1.0 trillion more than usual in 2020 due to government stimulus, while spending dropped by more than $500 billion. Combined with surging stocks and a rising home equity, potential new and move-up purchasers have more wealth to utilize. A projected strong economic recovery, demographic tailwinds and an accelerated pivot to remote work allows buyers and renters to live in locations where they can get more home for their money.
Take action now. Think about how effective home design can help mitigate affordability challenges. Land, labor, and materials prices aren’t likely to come down soon. Ensure that you are considering elements that drive value the most like smart maintenance, energy efficiency, and appropriate room dimensions. Our New Home Trends Institute monitors this every day.