A $4.5M house in the canopy mortgage market
A $5.5 million house in an urban canopy mortgage could be coming to market in just a few years.
According to a new report from the real estate analytics firm Trulia, the market for residential, commercial and institutional real estate in the city and suburbs is projected to grow from $16.9 billion in 2020 to $24.1 billion by 2022.
That’s a whopping $1.7 trillion in new property sales over the next ten years, and the number of houses in use in the area is expected to triple over that period.
That growth is due to many factors, such as the arrival of millennials and new tech companies, but one factor is also being touted as an advantage: the canopy mortgages are cheap, while homes in the traditional urban market can cost as much as $10 million a square foot.
The biggest difference between the two is that urban canopy mortgages require a minimum down payment, whereas traditional residential mortgage payments generally include an additional 10 percent.
For this reason, urban canopy homes tend to be more expensive than other types of residential mortgages, and Trulia estimates that the market could see $12.7 billion in new residential, and $13.9 trillion in institutional, commercial, and industrial real estate purchased in the next decade.
In the short term, the biggest difference is that canopy mortgage rates are lower.
Trulia’s report, which focuses on U.S. metro areas and excludes cities in Mexico, Canada, Brazil, and South Africa, says that a typical residential mortgage in the U.K. can cost $2.8 million, while the same loan in Mexico can cost between $2 million and $3 million.
That makes it easier for buyers to get into the canopy market than in the rest of the U, and it will likely keep the market growing.
Trumulia is already tracking more than a dozen cities across the U., including New York City, Los Angeles, Austin, and Seattle.
The company is currently working on a nationwide survey that will help identify the market’s most attractive markets, but for now, the company is focusing on urban areas.
With the market already booming, the question remains: what kind of homes will it be able to accommodate?
Trulia projects that the average housing unit in the United States will grow from 7.2 square feet to 10.5 square feet, and that is a much higher density than the 5.9 square feet per square foot that the company previously estimated was required to support the growth of urban populations.
In addition, Trulia says that urban areas are projected to see a growing number of households with children, which will make them even more expensive to build, and will likely mean that the size of the market will grow even faster.
In an interview with The Verge, Trumulator said that while the growth in demand for residential properties is expected over the course of the next few years, it won’t be easy to keep up with demand.
“We’re forecasting a significant growth in the residential market in the first half of the decade, and we anticipate residential demand to grow significantly in the second half of this decade, which is what we’re seeing in other developed markets,” he said.
“The question is how will we get the new housing construction to meet the demand?
That will be a very hard question to answer.”
The company expects the residential residential market to continue to grow at a fairly steady pace through at least the 2020s, and says that the city- and suburban-specific market will continue to show growth, albeit at slower rates than other markets.
But there are still many cities that are likely to remain in the black as urban demand for homes is expected not to match that of the suburbs.
“As we start to see the first signs of growth in these markets, and as demand picks up, it is unlikely that the demand will be matched by the supply of housing,” Trumula noted.