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Zenger
Business
Bibhu Pattnaik

U.S. Housing Boom Benefits Downsizers As Market Soars

Stock market graphic of Zillow Group seen displayed on a smartphone with a logo of Zillow Group in he background. Companies like Redfin Corp. and Zillow Group, Inc. have been at the forefront of the real estate market, offering innovative solutions and platforms for buyers and sellers. IGOR GOLOVNIOV/SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGES.

As the U.S. housing market continues its meteoric rise, homeowners looking to downsize are reaping unexpected benefits.

The significant appreciation in property values has positioned many in a favorable spot, especially those considering a smaller living space.

Chief economist at the Zillow Group Inc (NASDAQ: ZG), Skylar Olsen, likened the recent housing market surge to homeowners “winning the lottery.”

“Since January 2020, the market’s value has soared, creating a windfall for many,” said Zillow. 

Stock market graphic of Zillow Group seen displayed on a smartphone with a logo of Zillow Group in he background. Companies like Redfin Corp. and Zillow Group, Inc. have been at the forefront of the real estate market, offering innovative solutions and platforms for buyers and sellers. IGOR GOLOVNIOV/SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGES.

“The reason why I say lucky is because what happened over the last three years was stunning and, in some ways, was a bit like winning the lottery,” said Olsen to MarketWatch.

The total valuation of the U.S. housing sector has reportedly jumped by nearly 50%, reaching a staggering $52 trillion. Leading this valuation is California, contributing almost a fifth to the national total.

Other states like Florida, New York, Texas, and New Jersey have also seen significant gains.

Data from the National Association of Realtors (NAR) reveals that the median price for existing homes in the U.S. has climbed from $266,300 in early 2020 to $407,100 by August 2023. This surge, paired with climbing mortgage rates, has led to a dip in home sales.

Yet, for many, this has been an opportunity to sell their properties at a premium and buy smaller homes without accumulating more debt.

Olsen pointed out that the luckiest sellers are those who can purchase their next home in full, avoiding mortgages. The 2021 data from the U.S. Census Bureau showed that nearly 78% of homeowners aged 55 and above had their homes fully paid off.

The boomer generation, those between 58 to 76 years old, has been particularly active, both in selling and buying homes.

Their representation in home sales jumped from 42% in 2021 to 52% in 2022. This increased demand, coupled with the rising prices, has made it tougher for millennials to step into the housing market.

Stock market graphic of Zillow Group seen displayed on a smartphone with a logo of Zillow Group in he background. Companies like Redfin Corp. and Zillow Group, Inc. have been at the forefront of the real estate market, offering innovative solutions and platforms for buyers and sellers. IGOR GOLOVNIOV/SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGES.

Companies like Redfin Corp. (NASDAQ: RDFN) and Zillow Group, Inc. have been at the forefront of the real estate market, offering innovative solutions and platforms for buyers and sellers.

In comparison, Anywhere Real Estate Inc. (NYSE: HOUS) and RE/MAX Holdings, Inc. (NYSE: RMAX) have leveraged their vast networks and established brand names to maintain a significant market share. 

Investors looking to gain exposure to the real estate sector can consider ETFs such as iShares U.S. Real Estate ETF (NYSE: IYR) and Real Estate Select Sector SPDR Fund (NYSE: XLRE). These ETFs provide a diversified exposure to the industry, capturing the performance of both traditional and tech-driven real estate companies.

© 2023 Zenger News.com. Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

Edited by Judy J. Rotich and Newsdesk Manager

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