Downward angle icon Downward angle icon. In a recent report, New Western said the “major renovations” will continue through 2024. Johner Images The U.S. housing market could see a wave of inventory due to an increase in home resales. Fix-it-and-flip investor activity has already increased this year, according to real estate brokerage New Western. The firm estimates that up to 24 million homes could be opportunities for fix-it-and-flip investors.
The housing market could see a surge in much-needed inventory over the next few years, as as many as 24 million homes become ripe for renovation, according to New Western, creating opportunities for renovating and reselling investors.
For real estate investors focused on buying older homes, renovating them and putting them back on the market, the expansion is set to shift the U.S. housing market next year and could continue through 2027, real estate brokers said.
Home resales already appear to be on the rise in parts of the U.S. According to the firm, activity from new Western investors in cities such as Houston, Texas; Raleigh, North Carolina; and Atlanta, Georgia, has increased by more than 20% in the second half of the year compared to the first half.
“This steady trend, which we are calling the major renovation, will continue through 2024. The peak period for home renovations will continue through 2027, with 24 million homes due for a major renovation,” New Western said in a recent report.
That could be good news for a housing market that has been hit by a shortage of inventory over the past year due to soaring mortgage rates. Though rates have fallen from recent highs, homeowners are still hesitant to give up the ultra-low interest rates they got when they took out their mortgages years ago.
More than 90% of homeowners in the U.S. with a mortgage have loans with interest rates below 6%. Meanwhile, the housing market saw just 1.5 million homes listed for sale in October, down about 34% from October 2018, when inventory was 2.3 million, according to Redfin data.
But the market is growing optimistic that inventory levels will improve in 2024. The National Association of Home Builders projects housing starts will rise 5% next year. New Western said remodeling and resale investors will also be a key resource in boosting housing supply.
“Demand for new homes is high, but they take a long time to complete and only a small proportion of new homes are built at affordable prices. Builders are certainly a solution, but private investors are often overlooked and often do not have to deal with the same stringent regulations as builders,” the report added.
Adding more inventory to the market could be key to making housing more affordable, as a lack of supply has driven up home prices over the past year: The median home price in the U.S. has hit $413,000, nearly double the $278,000 five years ago, according to data from Redfin.