Housing Trends to Note for Fall 2014

As you build your investment portfolio over the coming months, keep in mind that the leaves aren't the only things that are changing this season. The housing market is being affected by multiple changes this fall, many of which are working in favor of house flipping professionals. Help ensure that you make the best investment decisions this fall by keeping track of these four housing trends for fall 2014.

1. Credit requirements are loosening

Mortgage rates have been low for the last several years, and they're likely to stay that way through the remainder of 2014. The problem, however, has been that many potential buyers have been unable to obtain mortgages due to imperfect credit scores.

This seems to be changing. In August of this year, the average credit score for new mortgages was 727. Last August, the average credit score was 734, and in the last few years the average has been as high as 750. In other words, you still need good credit to buy a house this fall, but your credit no longer needs to be absolutely perfect. Hopefully, this shift means that more potential buyers will enter the market over the next several months.

2. Buyers are willing to move far and wide in order to find affordable homes

Past generations have been unlikely to move far from where they grew up. Unless they had a job or a relationship pressing them to move, most people were likely to stay where they were most comfortable. This isn't the case today. Millennials have been picking up and moving in droves over the last few years, and this trend is likely to continue.

The youngest generation of potential homebuyers is moving to cities where they have good job prospects and more affordable housing options. Cities like Austin, Philadelphia, Baltimore, Columbus, and Jacksonville are growing every day with young transplants from more expensive metro areas. House flippers take note: growing metro areas with young populations present ideal opportunities this fall for fix and flip investing.

3. Buyers are sticking to their budgets

In another trend led by Millennials, homebuyers are being more conservative about their spending on new homes. Outside of high-end markets, extreme bidding wars are becoming a thing of the past. Young buyers who are less interested in owning property than their parents were are setting strict limits for themselves and choosing not to buy rather than overpay if the homes in their local market exceed their budget.

4. Housing inventories are increasing

While the total housing inventory fell in August, it was up 4.5% from the same month one year ago and is expected to increase over the next year. The low housing inventory has created pent-up demand amongst potential buyers who have been waiting for the right time and the right property to purchase. As the housing inventory continues to rise, more buyers should start coming off the sidelines and boost home sales and prices, which is great news for anyone interested in rehabbing real estate.
As we come to the end of 2014, the house flipping market of the last few years is becoming a fond memory. Of course, numerous opportunities still exist for house flippers, and excellent profits stand to be made this fall and into 2015. But the market is evolving, and the investors who will do best in the coming years are those who will grow and evolve with it.