Over the past couple of years, the housing market across the US has been extremely frothy thanks to a combination of historically low mortgage rates and low inventory due to many homeowners choosing to continue living in their space due to the uncertainty of the coronavirus pandemic.
Today, however, things have changed. As HomeLight notes in their Top Agent Insights for End of Year 2021 report, 62% of real estate agents report that bidding wars in their territory are on the decline, and 76% of agents report that they may get multiple offers on a home, but fewer bids per home. Much of this is attributed to homebuyers being exhausted and tired of engaging in cutthroat buying settings.
Even with these shifts, home prices are expected to remain elevated due to many homebuyers having money saved up because they weren’t spending on concerts, vacations, work wardrobes, and other recreational activities early in the pandemic.
If you’re looking to sell your home quickly, two hot trends in today’s housing market that you’ll want to be aware of are the demand for in-law units and short term rentals.
A surge in demand for in-law suites
Accessory dwelling units (ADUs), also known as in-law units have increased in popularity due to concerns over the safety of nursing homes throughout the coronavirus pandemic, ongoing childcare needs for working parents, and the appeal of multi-generational housing to avoid loneliness.
ADUs come in many forms such as attic apartments, backyard guest homes, and interior conversions that serve as comfortable living quarters on a main property. Over a third of agents report the demand for homes with ADUs has increased in their territories, because homebuyers want to house their parents, support adult children who need temporary housing for financial reasons, or provide accommodations to short-term renters such as tourists.
ADUs boost a home’s value by $65,908 on average, however they cost $77,329 on average, which means adding an ADU to an existing property is ideal for homeowners that view homeselling as something they plan to eventually tackle.
The impact of short term rentals on home values
Many agents now report an increase in VRBO and Airbnb listings in their territories, leading to an increase in tourism, and generating revenue for the neighborhood, however this only works in moderation. Agents estimate that owner occupied properties that are surrounded by short term rentals are worth up to 13.3% less when surrounded by a large amount of high volume short term rental properties.
If you live in an area with large amounts of short term rentals, a few ways to boost your home’s value is to build a private entrance to an ADU, install air conditioning and a washer/dryer unit, and offer a private outdoor space such as a balcony or patio.
To increase revenue from rent if you choose to rent out your space, you can allow pets and offer the space pre-furnished. Both of these are relatively simple, yet can do wonders in boosting your home’s value.