8 emerging trends in a cooling real estate market

The housing market is cooling down. Sales and inventories are stabilizing, with reduced activity in the market. There are many factors at play, including rising interest rates and costs of living with stagnant wages, more renters and fewer first-time buyers. Here’s 8 emerging trends in a cooling real estate market;

Rising interest rates and higher housing costs may be pushing first-time buyers into less expensive markets.

The rising interest rates and higher housing costs that have made the real estate market less affordable for first-time buyers may be pushing them into less expensive markets.

According to a recent report from the National Association of Realtors (NAR), after years of record-breaking sales, the number of homes sold in July 2018 dropped by 4% compared to July 2017. While this isn’t necessarily surprising given that we’re coming off such an extended period of growth and activity, it does hint at some potential trends that could shape your business moving forward:

An increase in renters

The number of renters is increasing in many cities, states and countries.

The number of renters has increased over the past decade in the United States, Canada and Australia. For example, between 2006 and 2016:

  • The share of households that rent increased from 31 percent to 36 percent in the U.S.
  • In Canada it went from 31 percent to 34 percent
  • In Australia it rose from 30 percent to 35 percent

More people renting longer before buying a home

One trend that’s emerged in recent years is that people are renting longer before buying a home. This trend can be attributed to several factors, including an increased emphasis on saving for a down payment, economic uncertainty and rising mortgage rates–all of which make it harder for some buyers to enter the market.

The proportion of renters who intend on buying in the next five years has fallen from 48% in 2016 to 41% today, according to Zillow data cited by The Wall Street Journal (WSJ). At the same time, home ownership rates have been declining since peaking at 69% in 2005; today they stand at 64%, according to Census Bureau data cited by WSJ.

Another factor driving this shift is millennials’ desire for flexibility: Many want freedom from tying themselves down with mortgages or other long-term financial commitments during their 20s and 30s when many young professionals switch jobs frequently or take time off after having children.

First-time home buyers are taking a back seat.

First-time home buyers have always been an important part of the real estate market, but as interest rates rise and prices drop, they’re becoming less significant players. The National Association of Realtors reported that first-time buyers accounted for 33 percent of all sales in 2018–down from 38 percent in 2017 and 41 percent in 2016.

Additionally they’re waiting longer to buy a home and buying smaller homes than before in more affordable markets (and thus paying less).

A shift to more modest, family-friendly homes

This trend is particularly important for those looking to buy a home. The price of real estate has been steadily increasing over the past few years, but it’s not always possible to afford the kind of luxury homes that have become synonymous with modern living.

In response to this trend, more buyers are now seeking out modest, family-friendly homes instead of large mansions or high-end condos. They’re looking for something more affordable and spacious–and if possible, with a yard so they can grow their own vegetables! If you’re looking to buy your first house and don’t want anything too fancy (or expensive), this might be right up your alley!

Investors are watching the market carefully.

As you may have heard, the real estate market has been slowing down for some time now. There are a number of reasons for this–rising interest rates, increased competition from investors and other buyers–but one thing remains clear: renters are still in high demand.

Rental vacancy rates are low across the country, meaning that if you’re looking to rent out an apartment or buy an investment property (or both), now is likely a good time to get on board with your plans before prices rise further.

In fact, investors should be keeping close watch over their investments as we move into 2020; according to Zillow data cited by CNBC’s Meera Bhatia , “rental vacancies fell below 5 percent nationwide last quarter [in 2019]…the lowest level since 2001.”

Buyers are doing their homework.

When the market is hot, buyers are often more focused on price and less concerned with other factors that could affect their decision. But as the real estate market cools off, buyers will be looking at more than just the price tag.

They’ll also be considering factors such as school districts, neighborhood quality and local economies, all of which can impact their overall satisfaction with their purchase.

Home prices are flattening out.

Although the news is populated by falling prices, what’s happening to home prices overall?

The answer is that they’re flattening out. In many cases, this is a sign that the housing market has hit its peak and will continue to stabilize as market forces begin to act on stock availability.


All in all, these trends indicate that buyers are being more cautious about their purchases and taking their time. They’re doing their homework and making sure they find the right home for their needs before committing to it. This is a good thing for both buyers and sellers who want to avoid getting into a situation where they end up regretting their decision later on down the road.

Scroll to Top