Buying A Single-Family Home Versus Other Types Of Homes
This Article Is About Buying A Single-Family Home Versus Other Types Of Homes For First-Time Homebuyers
Buying A Single-Family Home versus condos and/or townhomes are more popular among first-time homebuyers. Most home buyers want to have privacy as homeowners. Buying a single-family home offers a private yard and a distance between neighbors. Other homebuyers want more privacy they prefer buying a single-family home with acreage.
There are many communities in the United States where they have one to five-acre lot zoning on single-family homes. This holds especially true in rural horse communities where 5-acre zoning is mandatory. There is more maintenance required on single-family homes versus condos and/or townhomes. Condos and townhomes are very popular for homeowners who want as little maintenance and upkeep as possible such as millennials with very busy schedules and senior homeowners. However, homeowners of condos and/or townhomes have homeowner’s association fees that can be quite expensive with their monthly homeowners’ association fees.
Buying A Single-Family Home Is The Preference For Most Homebuyers
Homes are at historic record demands. This holds especially true for first-time homebuyers. Topping the most popular type of homes are single-family homes. Demand for single-family homes has been skyrocketing with over 900,000 single-family homes sold in June 2020. This data comes from the U.S. Census Bureau, nearly 840,000 single-family homes sold in June 2020, at the height of the boom. In June 2021, there were over 675,000 single-family homes sold. Families with children, single parents with children normally want to purchase single-family homes due to having a private lot with a backyard yard. Homebuyers with pets will seek to purchase single-family homes versus condos and/or townhomes.
Demand Growing Stronger For Single-Family Homes
Demand for single-family homes has always been strong but it increased pace in the past couple of years. There is still a major housing shortage. The demand for housing increased exponentially due to historic record-low mortgage rates. Mortgage rates on a 30-year fixed-rate mortgage are still at 3.0%. Homebuyers paying over 10% over the list price on a home is very common.
The coronavirus outbreak and corporations making remote job positions available also added fuel to the already hot housing market. As of October 2020, there are about 213 million single-family homes in the United States. Even with these many single-family homes, the demand for single-family homes is short nearly 4 million homes. To say we have a housing shortage is an understatement. There are many factors that have created this housing boom and the demand for housing. We will be discussing the reason for the skyrocketing demand for single-family homes as well as the skyrocketing home prices in the following paragraphs.
Reasons Why The Skyrocketing Demand Of Homes
The housing market has been strong for the past several years. However, it has been out of control crazy just in the past two years. The 2008 housing crash and financial crisis plummeted new housing starts from 2008 until 2012. There are four solid years of no growth on new housing. This created a lag in new homes. Starting in 2012 housing starts started to grow consistently until 2020. In 2020, the housing numbers reached close to the pre-recession numbers of 2008.
When the coronavirus outbreak hit the United States in February 2020, homebuilders put a stop to new construction. The halt of new construction by homebuilders created a backlog of homes until 2021. The coronavirus outbreak also put a halt in lumber and building materials which drove prices up. The shortage of lumber and building materials did not lighten up until June 2021 when prices began stabilizing. The high prices of lumber and building materials affected homebuilders and buyers willing to pay a premium on new homes.
Historic Low Mortgage Rates Are Triggering Many Renters To Purchase Homes
After the Federal Reserve Board lowered interest rates to zero percent, mortgage rates slid to an all-time historic low. 30-year fixed-rate mortgages have hit a low of 2.5%. Rates have slid back up but it is still at a historic low. 30-year fixed-rate mortgages are at 3.0% which is causing tens of thousands of renters to qualify for a mortgage so they can purchase a house. The Dow Jones and other market indices are at an all-time high and very volatile. Many investors are fearing a huge stock market crash and/or correction in the coming weeks or months. Inflation seems like it is going to be a problem for the U.S. economy. Buying a single-family home seems to be the best investment for most Americans. The strong demand for housing will continue in the months and years to come. The coronavirus outbreak created many changes in the workforce. Many companies have offered remote job positions for their employees. What this means is workers can now live anywhere in the United States. Those who lived in high price housing areas such as California and New York can now relocate to states where there is affordable housing. There is a mass exodus of taxpayers from New York and California. They are relocating to other states with affordable housing and a lower cost of living. Many lower-taxed states with affordable housing such as Kentucky, Mississippi, Alabama, Tennessee, Indiana are thriving and experiencing extreme population growth.
We are expecting the housing market will remain strong for 2022 and 2023. Homebuyers buying homes above list price have recently tapered off. Hopefully, the housing market will stabilize where the demand is in line with the inventory of homes. Statistics prove that single-family homes are the best investment in real estate compared to condos and townhomes.