In the U.S., apartments are getting smaller and smaller, meaning you might need to downsize your new home. On average, studio rentals are about 530 square feet. Efficiency apartments sit on the smaller side of this spectrum.
Shrinking apartments are likely the result of rising costs per square foot for rentals, but we’re learning to adjust. Many now look for smaller apartments on purpose, ready to give up having a separate bedroom for the benefits of living a little smaller.
While many begin their petite apartment hunt looking for a studio, it’s best to not discount an efficiency apartment. Efficiencies are like studios, but not exactly the same. However, they may be the perfect choice for your budget. Here’s what you need to know about renting an efficiency.
What is an efficiency apartment?
An efficiency apartment consists of only two separate spaces. Efficiencies combine all your traditional living spaces, except for the bathroom, into one room. Your bedroom, living room and kitchen won’t have built-in partitions.
The only doors in an efficiency apartment are the one leading into your bathroom and the one going out of the unit completely. There are many benefits of an efficiency apartment:
Tiny but mighty
Yes, they’re small and compact, but they don’t have to lack luxury. For too long, people associated small apartment size with a living space that felt cheap or poorly maintained. Actually, efficiency apartments vary in quality like any other apartment size.
It’s more about how much you pay in rent that determines how nice a place is, not the number of square feet. In some cases, you can even get more amenities by renting an efficiency in a nicer building instead of a larger apartment somewhere else.
Easy to clean
Another perk of the size of an efficiency is how easy it is to clean. With minimal square footage and only one bathroom, you can have your apartment sparkling in no time. A pack of disinfectant wipes and a broom may even be enough to do the trick, allowing you to keep valuable storage space open for things other than cleaning supplies.
Budget-friendly
Efficiency apartments are also your most budget-friendly option, in more ways than one. They’ll cost you less, on average, in rent than any other sized apartment, but that’s not all.
Having a smaller apartment means lower utility bills. You’ll have fewer rooms to light, heat and cool. Living alone means you’ll use less water, too. On average, the price of utilities in an efficiency is between $100-$150 per month. You could pay that much heating a one-bedroom apartment in the dead of winter alone, not to mention the cost of your other utilities.
Living in an efficiency apartment can allow you to cut a little bit from all your monthly bills. This can add up to some significant savings over the course of a year.
Going solo
Because of the size and layout of an efficiency apartment, you’ll most likely be living alone. There’s really no way to accommodate a roommate. You could share with a significant other, but understand that you’ll have no personal space.
Efficiencies might even feel too cramped to share with a pet. When looking for an efficiency, it’s best to fly solo.
What do efficiency apartments look like?
While the specifics will vary, efficiency apartments look like one big room and a bathroom. The kitchen is often along a wall, galley-style to stay out of the way. You may or may not get a closet, but it’s up to you to create natural divisions in the space with your interior design.
Source: Rent./Post Centennial Park
Living with a kitchenette
In addition to cramming everything but the bathroom into a single room, you may lose a little when it comes to your kitchen. Efficiency apartments may have a kitchenette, instead. By definition, this is a smaller version of a kitchen.
You may not get a full-sized fridge, and don’t expect a dishwasher. With limited space, you can lose a few appliances common in bigger apartments. However, hand-washing dishes for one isn’t a big job, and portable dishwashers do exist.
What’s the difference between a studio and an efficiency?
There’s really not a square footage difference between a studio and an efficiency apartment. It’s all about the layout when differentiating. You’ll know right when you walk into a prospective apartment whether it’s a studio or not.
“Whether you prefer to call it a studio or efficiency apartment,” writes Devon Thorsby from U.S. News & World Report, “stay focused on the specifics of the space as you shop for apartments to ensure your definition of the word matches up with the leasing agent’s.”
Even if your definitions don’t agree, if you find everything but the bathroom in a single room, you’re in an efficiency. Studios have more separation. You might not have doors on everything, but you’ll see a natural division in spaces. Your kitchen won’t be in your living room. You may even have a nook to serve as a bedroom.
Where can I find an efficiency apartment?
You’ll find efficiencies primarily in cities where apartments tend to be smaller. New York and San Francisco are prime examples, but availability isn’t limited to those densely populated spots.
If you value location over size, an efficiency apartment in your ideal part of town is a worthy tradeoff. Why move into a large apartment in an outlying neighborhood if you don’t have to? You can spare yourself a long commute, and the sense of feeling distanced from where all the action is, by cutting back on your square footage requirements.
Efficiency listings should pop up in apartment buildings all over, whether you’re looking downtown or in the suburbs. Look for newer construction if you’re having trouble finding units for rent.
Find efficiency apartments today!
Apartment complexes everywhere are acknowledging the benefits of efficiency apartments. Not only are they smaller so more fit into a single building, but they’re attractive to renters looking for affordable options. See if there are any available units where you live.
Lesly Gregory has over 15 years of marketing experience, ranging from community management to blogging to creating marketing collateral for a variety of industries. A graduate of Boston University, Lesly holds a B.S. in Journalism. She currently lives in Atlanta with her husband, two young children, three cats and assorted fish.
With the holiday shopping season fast approaching, a simple addition to your catalog can go a long way: gift cards.
Unlike other types of inventory, gift cards are cheap to produce, easy to ship and unlikely to be returned. If you offer digital gift cards, you can’t run out — and you can keep making sales until a few minutes before gifts are exchanged.
“People love giving gift cards,” says Rachel DeCavage, owner and creative director at Cinder + Salt, an eco-friendly clothing company based in New England. “It’s a no-brainer way for them to give someone something that they’re going to love.”
People love getting them, too. In an October survey from the National Retail Federation, 55% of respondents said they hope to get a gift card as a present this year.
Here’s how you can make gift cards part of your holiday strategy, whatever you sell.
1. Create your gift cards
You may be able to order physical cards or offer digital ones through your e-commerce platform or point-of-sale system. Physical cards typically cost less than $2 per card, and digital cards are often free.
Physical cards are more popular gifts for Chicago-based indoor golf facility The Green, says founder and managing partner Connor Ptacin.
During the holidays, Ptacin estimated his team mails out “like 20 gift cards a week” to people who want to give their loved ones something physical.
Digital cards let you keep making sales until the very last minute. DeCavage says she usually sees a rush of gift card orders “like three days before a holiday.”
The right mix of digital and physical cards depends on your customers. If most of your sales take place in person, physical cards may be more popular. But if more of your customers shop online and you tend to ship orders farther away, or if you’re trying to grow your online sales, lean into digital cards.
2. Promote them as gifts
Display gift cards by your register and prominently on your e-commerce website to catch shoppers’ eyes.
“Just pop it right there on the counter and drive the impulse purchase,” says Jay Jaffin, chief marketing officer at Blackhawk Network, which helps retailers create and sell gift cards and other rewards items.
You can use gift cards to encourage other spending. This year, DeCavage is offering gift cards as bonuses to customers who spend more than a certain amount at Cinder + Salt.
“It could be an incentive for them or it could be something they can give to someone else, and it also feels like they’re getting a discount,” DeCavage says.
Make sure your cashiers know how to load gift cards using your point-of-sale system and how to package them. Those transactions give your staff the opportunity to make additional sales, too: DeCavage encourages gift card buyers to add something small, like a sticker, so it’s more exciting for the recipient to open.
“We try to make it a part of the shopping experience for people who are really unsure about what to get,” DeCavage says.
Promote gift cards on social media and via email, too. A well-timed online marketing campaign can remind previous customers that you have gift cards available — especially if you can reach last-minute shoppers at the right moment.
Lastly, Ptacin recommends swapping gift cards with other local businesses that serve similar audiences. That can help you reach new customers who might have just needed a push to visit you.
3. Prepare for redemptions
If you sell enough gift cards, you might reduce the intensity of another post-New Year’s headache: returns.
“A lot of times, what you see is a bunch of returns at the beginning of the year,” Jaffin says. “Sometimes, those gift cards can actually help balance that out — that first-quarter lull.”
Shoppers usually spend more than what’s on their gift cards, Jaffin adds.
DeCavage says gift card shoppers often behave differently. Instead of making a beeline for their desired item, they tend to spend lots of time browsing.
“For small retailers, gift card programs can really be a low-maintenance and affordable way to compete against larger stores,” Jaffin says, “while also helping to acquire new customers and encourage repeat foot traffic.”
For nearly 30 years, Deion Sanders has been a recognizable name in the sports world. He’s made headlines again this summer after being named the new head football coach at the University of Colorado Boulder and subsequently undergoing a roster overhaul that resulted in the departure of 81% of last year’s roster.
A majority of the exits were made after Sanders and the coaching staff audited the roster and determined it wasn’t optimized for the desired productivity and results. This move has paid off as three weeks into the 2023 season (as of this writing), the Colorado Buffaloes were 3-0 and hosted ESPN’s College GameDay.
Similarly, many lenders are currently auditing their roster of vendors and technologies to optimize productivity and return on investment (ROI).
One of the more commonly used metrics to determine a lender’s ROI is the per-loan pre-tax net production income, and the biggest factors impacting this metric are production volume in both dollars and units. Closing fewer loans means the production costs are spread out over fewer units, thereby increasing the production cost per loan.
Since peaking at $5,535 in Q3 2020, thanks to historically high production volume, the per-loan, pre-tax net production income for independent mortgage bankers (IMBs) has been falling. The most recent report from the Mortgage Bankers Association (MBA) shows that IMBs lost an average of $534 per loan in Q2 2023. The good news is that the last two quarters have shown steady improvement from Q4 2022.
For many lenders, priorities for this year include migrating their systems to the cloud and increasing production volumes, lead generation efficiency and productivity, which includes engaging business intelligence (BI) tools that can provide insights necessary when making staffing decisions. And they’re making sure they have the technologies to do so.
A very common sentiment in the industry is that now is the time to double down on implementing new tech because lenders have the time to focus on it. Obviously, that is a great mindset for vendors, but it isn’t really a great course of action for lenders because most are trying to decrease costs, not increase them.
Conduct a tech stack audit as a first step
As well as tabling tech stack additions initiated during the pandemic, lenders are reevaluating their current tech stack compositions, looking for areas where they can cut costs without sacrificing productivity or efficiency.
When auditing a tech stack, there are several factors to consider beyond immediate cost savings. These factors include the need the tech satisfies, the usefulness of the tech, operational errors, utilization, system functionality and vendor deficiency.
The objective of a tech stack audit is to consolidate, optimize and replace unnecessary tech. The benefits of considering these factors during a tech stack audit include reducing software redundancies, streamlining back-end processes, maximizing the advantages of integration, minimizing billing issues, decreasing the need for additional employee training and improving data flow.
While every lender will have unique considerations during a tech stack audit, there are basic steps that should be taken to realize the potential benefits of the audit. The first step in any audit is to compile a list.
It’s basically impossible to conduct a successful tech stack audit without knowing every software currently in it. This list should also be compared to accounting records to ensure that all tech is accounted for while verifying the current spend on each tool.
Analyze the audit to take decisive action
Once the tech stack list has been compiled, or as the list is compiled, it’s time to expand the data set associated with each technology.
This includes information such as the department(s) that use the software, type of software, features and functionalities, total number of users, definition of an active user, number of active users, annual cost and relevant integrations.
Lenders can also use this time to survey employees on why they do or do not use particular tools and the qualitative and quantitative impact of each tool.
With this information in hand, it becomes easier to determine the value each software brings, if there are better solutions on the market and how it affects the customer experience.
This information provides lenders with a greater understanding of the effectiveness of each technology, where there are overlaps in functionalities and the adoption rate of the technology within the organization.
Having these factors analyzed with the same criteria allows lenders to determine where to make cuts and improve efficiency by eliminating redundant, outdated and unused software.
A leaner tech stack should improve ROI, streamline business
As lenders slim down their tech stacks, they should quickly see increases in their ROI. This will typically result from a combination of several factors. Reducing expenses should positively impact the profit and loss statement (P&L), including showing a net increase in revenue.
A leaner tech stack will help streamline training for new employees and clearly outlining the benefits and features of each tool should also lead to increased adoption by existing employees. A greater understanding of a tech stack’s offerings and how to maximize the benefits and efficiencies of each tool will improve employee satisfaction and provide a better customer experience.
By reducing a tech stack’s offerings, lenders also mitigate risk by minimizing software entry points, passwords and data access, keeping data and back-end processes clean and reducing the potential for quality control issues by eliminating software redundancies.
With much of the mortgage process reliant on the software in a lender’s tech stack, it’s improbable that a lender will see a reduction in their tech stack roster like the one orchestrated by Coach Sanders.
Unlike the Colorado football team, though, lenders shouldn’t be looking to build a new tech stack from scratch, but they can make winning moves with their tech stacks. Lenders should focus on increasing production volumes, operational efficiencies and profits. With these goals in mind, they should be able to easily reach their desired results of a tech stack audit.
Following in the footsteps of Bank of America and Countrywide, Washington Mutual is pulling the plug on scores of existing home equity lines, according to a report from the San Francisco Business Times.
The Seattle-based thrift and mortgage lender will begin sending out letters to homeowners notifying them that their home equity lines of credit will be reduced or shut off completely, depending upon where they live and perhaps their current loan to value ratio.
WaMu has apparently reduced the amount of home equity able to be tapped from customer’s homes by a whopping $6 billion to mitigate risk in depreciating markets, regardless of credit profile.
But the bank defended its position, claiming that the move will also protect homeowners and prevent them from falling underwater if home prices continue to sink.
Additionally, it said it has a process in place for those looking to appeal the decision, and has pledged to assist those with special circumstances.
The move comes as the mighty savings and loan continues to struggle amid the ongoing mortgage crisis, with many of its loans made in rapidly depreciating areas of California.
Last month, WaMu unveiled plans to exit wholesale lending, cut 3,000 jobs, shut all its freestanding home loan offices, slash its dividend to a penny, and raise $7 billion via a TPG investment after reporting a $1 billion loss.
That’s on top of the 3,000 previous job cuts that took place back in December 2007 when the bank halted subprime lending.
Home equity line losses have rattled a slew of banks in recent quarters, forcing most to withdraw the products altogether.
Shares of WaMu fell 18 cents, or 1.74%, to $10.14 in midday trading on Wall Street.
The trough for the mortgage origination market is nearing an end point and 2024 is shaping up to be a better year for the industry, economists of the the Mortgage Bankers Association (MBA) said at the 2023 Annual Convention & Expo in Philadelphia, Pennsylvania.
The MBA doesn’t expect the Federal Reserve to hike interest rates further this year as real rates – which are inflation-adjusted– are 2%.
“They’re already at a place where if they do nothing, and inflation holds or falls further from here, they’re going to be slowing the rate of growth and the cumulative impact of the rate increases they’ve already made are not fully felt yet,” said Mike Fratantoni, MBA’s chief economist and senior vice president for research and industry technology.
Based on the cautious messages from even the hawkish Fed members, Fratantoni projected that the central bank will “definitely not be going to hike in November, a small chance that they would come back in December if these numbers turn around.”
The MBA’s view is that the Fed will cut interest rates three times in 2024 and inflation may come down a bit faster as a result.
“I’m pretty confident that if this rate path precedes as we’re expecting, this is the bottom. 2023 is going to be the low-volume (mortgage origination volume) year for this cycle. So after falling 50% from 2021 to 2022, our current estimate has it falling almost 30% from 2022 to 2023. But then a rebound in 2024 — up 19%,” Fratantoni said.
Purchase originations are forecast to increase 11% to $1.47 trillion next year.
In terms of units, the MBA expects about 5.2 million units in the total number of loans originated in 2024, up from this year’s expected 4.4 million.
“It’s still a pretty challenging environment relative to if you look back historically, this is close to where we were in 2014. Maybe just below where we were in 2018 — still a challenging year for the industry,” Joel Kan, vice president and deputy chief economist of MBA, said.
Mortgage rates will drop, but challenges linger
MBA’s baseline forecast is for mortgage rates to end 2024 at 6.1% and reach 5.5% at the end of 2025 as Treasury rates decline and as the spread narrows.
The historically high spreads between mortgage rates and the 10-year Treasury yield – which was triggered by the uncertainty about monetary policy and the direction of quantitative tightening – will resolve in a “favorable direction over the course of the next six to 12 months,” Fratantoni added.
The MBA raised expectations of a mild recession in the first half of 2024 due to the combination of the cumulative impact of the rate hikes, the banking system tightening down on all forms of credit and the slow global environment all leading to a slowdown in the US.
The unemployment rate is expected to rise to 5% by the end of 2024 from the current rate of 3.8%. Inflation, in return, will gradually decline towards the Fed’s 2% target by the middle of 2024, Fratantoni said.
As mortgage rates come down to the 6%-range in 2024 and the 5% range in 2025, borrowers will see less of a trade-off in moving, Kan projected.
Kan added: “I think that’s when you’re going to see more inventory free up, that’s when we’re going to see more of these housing transactions able to take place.”
The MBA anticipated first-time homebuyers will account for a large portion of housing demand over the next few years, given the largest age cohort entering its prime homeownership ages.
“There will still be challenges, as median purchase and interest payments remain high, for-sale inventory is scarce, particularly for entry-level homes, and credit availability is low,” Kan said.
A couple more painful quarters ahead
The mortgage origination market for banks and independent mortgage banks was painful given that they all saw five consecutive quarters of net production losses.
While production losses were less severe in Q2 2023 from the previous two quarters, lenders are projected to have a few more painful quarters until the end of the spring of 2024 – mainly due to the traditionally slow winter season, Marina Walsh, CMB and vice president of industry analysis, anticipated.
For lenders, excess capacity continues to be a challenge with low productivity levels and high expenses per loan.
“Lenders have reduced their head counts and gross expenses, but the record-low volume is a primary driver of these escalating per-loan costs,” Walsh said.
The MBA previously estimated that a 30% decrease in the mortgage industry employment from peak to trough will need to occur, given the decrease in production volume.
The MBA estimated that the industry is roughly two-thirds of the way there from the previously mentioned 30% overcapacity in the industry.
Mortgage industry employment dropped 20% in 2023 from the peak in 2021 and the number of active MLOs for state-licensed companies dropped 29% from the same period, according to the MBA.
Like many other mortgage lenders throughout the nation, Indymac revealed on its company blog that it has been “proactively adjusting HELOC limits” in light of the current mortgage crisis.
The Pasadena, CA-based thrift said adjusting and/or freezing home equity lines of credit isn’t a new concept, but is in the interest of the investor, bank, and borrower, noting that it’s prudent to lower a borrower’s potential debt load if their financial situation warrants it.
Indymac added that it can adjust the terms of Helocs for any given reason without notice, but listed a number of reasons why a line may be cut or frozen.
These include a Fico score drop of 50 points or more, so long as it’s below 700, a 10 percent drop in valuation, based on a current appraisal (AVM), a late mortgage payment in the previous 12 months, a borrower misrepresentation, or a subordinate home equity loan.
The company noted that it hasn’t been a big home equity line lender, with the loans making up just two percent of the lender’s servicing portfolio as of the end of the first quarter.
Additionally, Indymac said the average credit score at time of loan origination was 717 and the average combined loan-to-value ratio was 82 percent, which would appear low-risk.
But because home prices and credit scores have eroded in recent months, weighted credit scores now stand at 704 and combined loan-to-values (CLTVs) at 92 percent.
Indymac holds $1.5 billion in Helocs in its own mortgage portfolio, including $1 billion in loans the bank intended to securitize and sell last year before the secondary market locked up.
If your line gets cut or frozen, don’t fret, they’ve got an appeal hotline that can be reached at 1-800-669-2300, extension 5999. (now where did I put that form letter…)
Shares of Indymac jumped 30 cents, or 17.24%, to $2.04 in late afternoon trading on Wall Street.
One of my concerns with higher rates has been whether new listings data would take another leg lower, which wouldn’t be a good thing for the housing market. Not only has that not happened, but we have had an orderly seasonal decline this year — outside some wild swings around Labor Day and schools starting.
This proves that we are trying to form a historical bottom in this data line, something I discussed earlier in the year on CNBC. As we can see in the chart below, it is very steady, considering how crazy rates have been lately.
One of the things I have gotten wrong in 2023 is my premise that if mortgage rates rose, the inventory growth would pick up for a few weeks, at least between 11,000-17,000. However, even with 8% mortgage rates last week, I am still batting a zero in 2023 as inventory growth last week was just 7,900.
Last year, the seasonal peak for inventory was Oct. 28. Last week, according to Altos Research:
Weekly inventory change (Oct. 13-Oct. 20): Inventory rose from 546,450 to 554,350
Same week last year (Oct. 14-Oct. 21): Inventory rose from 567,452 to 571,944
The inventory bottom for 2022 was 240,194
The inventory peak for 2023 so far is 554,350
For context, active listings for this week in 2015 were 1,171,430
Traditionally, one-third of all homes have price cuts all year long. When rates rise and demand gets weaker, the price cut percentage can grow. The price cut percentage in 2023 is still 4% below what we had in 2022, even with higher home prices and mortgage rates. Price cut percentages in recent years:
2023 38.5%
2022 42.5%
2021 28%
Mortgage rates and the 10-year yield
The bond market and mortgage rates have had such a wild ride recently, and it reminds me of the action during the first week of COVID-19 when we saw massive volume in buying treasuries. In the same vein, the bond market is now very oversold. However, more importantly, real yields are very restrictive for the economy now. In the last week, the 10-year yield went from 4.62% to 4.99%, ending at 4.92%.
I recently discussed on the HousingWire Daily podcast whether these rates are recessionary because the history of real yields being this restrictive has always led to a recession. Earlier in the year on CNBC I said that the Fed wouldn’t be satisfied until the labor market breaks. Even though the Fed has talked about no more rate hikes, now that the 10-year yield and mortgage rates are higher, they believe the monetary policy is restrictive enough to accomplish the goal they always wanted from the start: attack the labor supply.
Mortgage rates went from 7.66% to 8.03% last week to end at 7.97%. If the Fed wants to create a job-loss recession, attacking the housing market a second time looks like their target. They remain frustrated that the labor market is not breaking.
Purchase application data
Purchase application data was down 6% last week versus the previous week, making the year-to-date count 18 positive prints, 21 negative prints and one flat week. If we start from Nov. 9, 2022, it’s been 25 positive prints versus 21 negative prints and one flat week.
Of course, higher rates have made affordability worse; whenever rates move up or down by just one 1%, millions of potential homebuyers are qualified or not qualified to buy a home.
The week ahead: Home sales data and jobless claims
Next week, we have new home sales and pending home sales — which are at significant risk of a big miss. Jobless claims, of course, come out every Thursday and that has been the key data line for me at this expansion stage. Also, there are many variables worldwide, and who knows what the Fed will say. We will be tracking all the live data to keep you updated.
Inside: Do you want to make money online fast? If so, we’ll discuss the best digital products to sell on Etsy. By following these steps, you’ll be on your way to making money selling digital items quite easily.
Do you want to learn how to sell digital products on Etsy and make money through it?
Selling digital products offers an exciting avenue for generating passive income. With their low production and distribution costs, high profit margin, and potential for scalability, they stand as a lucrative business model for many entrepreneurs.
Moreover, once a digital product is created, it can continuously bring in revenue without the need for additional production costs, making it an appealing source of passive income.
The key to being a successful Etsy seller is to understand your chosen niche and what your audience wants.
We will dive into digital products you could sell on Etsy which range from arts & crafts to business materials.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What are Digital Products?
Digital products are items that are accessed and delivered electronically, examples of which include software, ebooks, online courses, digital music, video, and audio files.
These intuitive products offer the versatile benefit of being easily reproduced and instantly accessible on various devices, without the requirement of physical storage or shipping. Plus the world is moving towards becoming digital anyway.
In creating digital products, businesses aim to capitalize on customer appeal and convenient delivery, which often complement their physical goods or services.
Why Sell Digital Products on Etsy?
Selling digital products on Etsy offers an incredible opportunity to showcase and monetize your unique creations. With Etsy’s vast online marketplace and its millions of potential customers, it has become a preferred platform for artists, designers, and content creators.
Furthermore, it provides the flexibility to set your prices in accordance with the value you offer and experiment with different pricing strategies.
This is a hassle-free way to monetize your creativity. Here’s why:
You craft it once, it sells eternally: Digital products offer the ultimate advantage of a “create once, sell forever” model. Imagine sipping a cup of tea while your creation secures sales one after another.
Resource-friendly: Bid adieu to the restrictions of shipping, storage, or material costs. Instead, welcome the comfort of financial freedom and resource efficiency.
Everlasting stock: Digital products on Etsy never run out! Say goodbye to inventory issues and overselling, which makes it a smart choice for long-term business.
So, start now by creating an account, picking your digital product, setting up shop, and starting selling on Etsy. With no heavy fees and no botheration of shipping.
Just pure creative power leads to sheer earning happiness.
What digital products sell the most on Etsy?
Well, our data shows that digital prints, planners, stickers, fonts, and children’s educational materials are some of the best-selling categories netting serious cash on this creative marketplace. This information came from Cody and Julie – the founders of the e-Printables course.
Typically, seasonal content always does well on any platform. Same with current trends like the “Barbie” craze.
These products are a creative enthusiast’s goldmine owing to their limitless customization capabilities, instant delivery, and cost-effectiveness.
Wherein, most busy professionals, students, parents, and small business owners find them irresistible due to their convenience and adaptability to suit specific needs and tastes.
To learn more about selling on Etsy, I highly recommend connecting with Cody and Julie in their free webinar.
What digital download sells best on Etsy?
Among the myriad of digital products available,digital prints notably rank as one of the best-selling downloads on Etsy, closely followed by other popular items such as:
digital planners
logo designs
travel guides
business card designs
Lightroom presets
printable invitations.
A beautiful synergy of convenience, utility, and aesthetics, that can be printed at home or in a local print shop, whenever you wish. Perfect for last-minute gifters, DIY décor enthusiasts, or anyone looking for hassle-free beautification!
So, staying in the game, consistently monitoring market trends, and adapting accordingly is the key to successfully selling your digital prints on Etsy.
Best Digital Products to Sell on Etsy
The best digital products to sell on Etsy depend upon various factors, such as your skills, customer interests, and specific market trends.
It is also important to keep an eye on high-sales products, check positive reviews, track favorites, and note recurring themes to understand what customers are looking for and to guide your digital product offerings. This is a quick way to make 300 dollars fast.
Here are the examples of some of the best digital products you might want to sell on Etsy:
1. Printable or Digital Planners
You’ve hit the jackpot if you’re contemplating selling printable or digital planners on Etsy. Some people might say digital or printable planners are seasonal but due to the high demand and flexibility, it could be the golden goose for your marketing on Etsy.
Buyers love and enjoy the tailored usability offered by printable planners, which they can customize to their requirements and physically pen in their plans.
You can supply this demand by offering a large variety and aesthetically pleasing designs.
Tip: Try bundling in different types of stickers for a snappier offer.
2. Craft Patterns
Craft patterns are a top-ranking digital product on Etsy, thanks to a revival of all things crafty!
From knitting and crocheting to sewing and embroidery, these digital masterpieces cater to the abundant trend-setters and hobbyists who frequent Etsy.
To truly get your digital craft patterns thriving on Etsy, remember to follow the trail blazed by successful pattern sellers like these Etsy sellers. These crafts start from an average selling price of $10, making them a lucrative venture for creatives.
Lastly, don’t forget to unleash SEO magic – get your product seen by the right people especially when creating a sewing pattern or crochet pattern. This can be your missing element for transforming hard work into hard sales!
3. Children learning materials
Looking for a profitable side gig? Selling children’s learning materials on Etsy is wildly popular and well-needed especially for those homeschooling.
Parents and teachers are snapping up digital educational resources. By marketing printable lesson plans, colorful flashcards, and engaging worksheets, parent is hyped to supplement their children’s education.
This is a great summer job for teachers because your educational resources might just be the next best-seller on Etsy.
Crack open those lesson plans, as your Etsy store awaits.
4. Wallpapers
On Etsy, phone wallpapers are the new moneymaker. Provide colorful ways for customers to personalize their devices, these digital beauties are a hot ticket item.
To catch the widest net, cater to both phone and desktop users. You must keep up with trends. Also, creating wallpapers for Apple watches and other high-tech gadgets or themed designs for holidays is always a hit.
It’s a simple concept: stylish wallpapers have an average selling price of around $3-4.
5. Calendars
Venture to sell digital business calendars guarantees a steady demand, as planning isn’t just a phase – it’s woven into the fabric of daily life. To get started, unlock your artistic prowess with any digital art program like Adobe Photoshop or Canva.
Begin creating your unique touch on calendars, ensuring they’re editable pre-print- a clear selling point. Remember, quality trumps all – prioritize visually appealing designs with user-friendly formats.
Time to turn dates into dollars. Listing calendars in your Etsy shop certainly won’t go out of style or demand. Also, aim for the $5 – $10 price range to hit the sweet spot of affordability and profitability.
6. Invitations
Invitations are among the top-selling digital items on Etsy.
Customizable templates for various occasions like weddings, parties, baby showers, and more are particularly popular. It’s perfect for creative individuals skilled in design who are looking to turn a profit on their talents.
These digital products can provide a meaningful revenue stream. Some creators can charge up to $20 per customized item.
The bottom line is that selling digital invitation templates on Etsy doesn’t just allow for creativity, but it’s also a lucrative business opportunity.
7. Business cards
Catering to the surge of remote entrepreneurs and the timeless need for personal cards, this trend is something to tap into.
You can offer editable, customized, or even smart cards – with features like one-click phone calls or emails – which can give your shop an edge.
Through Canva or Wepik, you can design exotic templates, offering customers the control to personalize before printing. Turn on your creative juices, let your brand shine, and step up your entrepreneurial ladder with a business card template.
8. Wedding Invitations and Printables
To be honest, I actually created my best friend’s wedding invitations. Maybe, I should have stuck with the side gig to make 500 dollars fast?!?
Wedding printables are now the ‘go-to’ digital products. This isn’t just about a cute ‘Save the Date’; offers a hassle-free, all-in-one wedding stationery solution, ready to match every wedding theme under the twinkling lights.
Help the DIY couples by providing a bundle: wedding program, customized hashtag sign, table place cards, save-the-date cards, and even personalized portrait options with a delightful sign thrown in.
You can provide a seamless experience and watch the sales ring along with the wedding bells.
9. Journal Inserts
Are you a fan of journaling or love designing layouts? Well, it’s time you converted your passion into profit. Making journal inserts is one of the smartest digital products you can sell on Etsy.
Audiences vary from educators needing organized lesson and homework schedules or those seeking self-help and discovery questions.
For optimal selling, focus on providing a variety of designs and including white spaces for personal touches.
With an average selling price of $5, they appeal to smart shoppers who prefer to print inserts on cardstock paper.
10. Digital artwork
Digital artwork stands out in popularity due to the unique customization and selection variety it offers.
Customers are drawn to the ability to choose from diverse art forms, including watercolor illustrations, inspirational quotes, and Baltic or Bohemian prints, that perfectly align with their personal aesthetic or represent an emotion they resonate with.
Moreover, the availability of immediate prints post-purchase greatly increases the convenience and appeal of this artwork form.
11. Recipe cards
Do you love cooking and want to create delightful digital recipe cards for your customers? But, don’t stop there, look at creating a meal planner to bundle with!
A printable, editable canvas for food aficionados brimming with delicious details of recipe cards is a great product. These digital delights are perfect for amateur chefs, bakers, and recipe bloggers.
The takeaway is clear. Selling recipe cards on Etsy is as facile as slicing butter, once you’ve got the right ingredients and the perfect recipe. It’s time to turn the heat up on your Etsy store and dish out some delightful recipe cards.
12. Social media templates
Creating social media templates can provide significant value for businesses and influencers seeking to establish a professional and cohesive online presence.
These templates, which can include pre-designed Facebook banners, Instagram stories, Twitter headers, and more, can be customized to fit a variety of themes such as minimalism, boho, or pastel colors.
When well-crafted, such templates can save businesses valuable time and effort while also helping maintain consistent brand imaging across different platforms. This is similar to a business hiring a virtual assistant with no experience.
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13. Printable Cake and Party Decorations
Selling printable party decorations as digital products on Etsy is like icing on the proverbial cake for smart entrepreneurs.
You can focus printable party decorations from charming cartoon-themed toppers for kids’ birthday cakes to exquisite, romantic pieces for weddings and anniversaries.
Whether you’re creatively inclined or have an entrepreneurial spirit spotting potential, these printables offer a loophole to financial growth. Bundle your decorations based on themes for enticing offers.
14. Zoom background
Thanks to the surge in remote working and virtual meetings selling incredible Zoom backgrounds on Etsy has emerged as a lucrative product in the digital landscape.
These tailored digital backdrops not only enhance the visual appeal of online interfaces but also cater to users’ needs to maintain privacy or conceal unorganized spaces.
However, you need to understand that creating Zoom backgrounds may not be beginner-friendly due to the required customization. However, do not let this intimidate you.
15. Productivity Trackers
People are constantly in search of practical, user-friendly tools to streamline their lives and make every hour count.
So, these productivity trackers are supremely versatile, covering daily routines, budgeting, goal setting, project management, and even grocery lists. Make your Etsy shop the one-stop shop for everyone’s needs.
As it becomes an increasingly popular choice to shift focus towards maximizing effectiveness in people’s daily lives. Whether it’s maintaining a workout routine, tracking investments, or staying on top of a student’s study schedule, these trackers cater to a wide assortment of needs.
16. Lightroom Presets
Lightroom Presets are essentially preset configurations that enhance a photo’s aesthetics, and folks from influencers to amateur photographers are keen to have them.
For starters, it caters well to the Instagram-obsessed demographic continually seeking to elevate their photo game. This venture is best suited for those who have a knack for photo editing and an understanding of aesthetics.
With an average selling price of $10, the numbers tip favorably in your Lightroom presets.
17. Etsy shop banners
Help out your new Etsy sellers by designing an impressive storefront with their shop banner.
Indulge your Etsy shop banners in various design themes suitable for a wide range of stores. Also, include a shop kit that makes store icons, a large and small banner, custom and reserved listing templates, and a profile picture graphic.
Promote your banner designing prowess to other sellers, so that you increase your brand awareness along Etsy.
When you have an awesome shop yourself, you are more likely to get sales!
18. Logos & branding kits
Move over, clip art! Logos and branding kits are in high demand as they fulfill the crucial need of every business that is striving for a unique identity.
Bundle your logos and branding kits or offer them individually to maximize your reach. Also, combining them with other digital products like media kit templates elevates your shop’s appeal.
This caters to diverse clients from Etsy sellers to businesses, influencers, and bloggers. Selling in this segment, you’ll never run short of market demand. Get ready to impress with your graphic skills, and ride the wave of this profitable venture on Etsy.
19. Thank you cards
This is a timeless product that is regularly used by businesses and individuals to express their gratitude.
Offering these thank you cards in digital, customizable formats can attract more buyers due to ease of customization and competitive pricing relative to store-bought alternatives.
You can also sell the same design on physical cards if you want for another revenue stream.
20. Fonts
In the world of businesses, creators, and crafters galore are on a relentless hunt for the perfect font that suits their needs. Where versatility is a font’s middle name – they can jazz up a brand’s website or add pizzazz to a party invitation.
Cricut fonts, in particular, are best-sellers. It is specially crafted for Cricut machines – a hit in the Etsy community of designers and makers.
Remember, the devil is in the (font) detail. Jump into the journey of digital font selling on Etsy and watch your typography turn into a treasure in no time.
21. Resume templates
Resume templates are handy, well-designed digital products are reportedly perfect for professionals keen on making their job applications stand out. It is mostly designed to suit particular sectors such as real estate or marketing.
After all, a well-structured resume could be the golden ticket to someone’s dream job – like one of these low stress jobs that pay well without a degree.
However, in my personal experience, the most successful templates are clean, professional, and neutral in color.
22. Invoice templates
You might think that cashing in invoice templates may seem odd, but these digital products offer ample sales potential on Etsy!
Their charm lies in their simplicity and frequently used nature by a wide range of businesses. Small business owners, short on time and design skills, frequently scout Etsy for professionally designed, eye-catching invoices – duly making it your prime market.
Transform invoice templates into a goldmine, with less likelihood of running into steep competition. With an average selling price of $10, you can surely earn money online quickly.
23. Website templates & themes
Are your web design skills a cut above the rest?
Leveraging your skills to create and sell website templates and themes on Etsy, and turn your talent into a tidy profit. This digital product must be customization-friendly with a range of applications, and cater to a broad audience—from small businesses to in-demand bloggers, giving them a sleek, professional online presence minus the design headache.
Begin by focusing on creating templates on popular website-building platforms like WordPress with a Kadence WP Theme. Make sure they serve a specific market, like photography websites or eCommerce stores, and ensure your products have unique, eye-catching designs that set them apart from the sea of competitors.
Remember, if your themes and templates are more unique and tailored. You can command, sometimes get a range of your product to $50.
24. Stickers
Stickers, both physical and digital stickers, are hot commodities on Etsy, cozily nestled among the platform’s top-selling items.
It also appeals to a large market spectrum, from social media users who love accentuating their chats with digital stickers, to fans of physical stickers decorating their belongings.
Remember, one major selling point is the editability of digital stickers, enabling customers to customize after purchase. Dial your creativity, pick a distinct theme, and roll out your sticker sets on Etsy – there’s a world waiting to stick onto your designs!
25. Bookmarks
Feeling bookish? Get your create-on and cash in on the thriving trend of selling digital bookmarks on Etsy.
Digital bookmarks, at a modest cost of $2 – $3 a pop, are gaining popularity as one of the easiest and fastest-selling digital products, thanks to their charm, practicality, and customized appeal.
Create an aesthetic touch on your reading escapades by hitting the serious tribe of bookworms. To amp up your sales and earn money quickly, don’t forget to add “personalization” options to your bookmarks.
26. Editable flyers
As demands surge, these feature-rich editable flyers become ideal for crafty entrepreneurs aiming to make a profit.
Most of your clients will be large markets comprising event organizers, business owners, and individuals who find convenience in ready-made editable materials.
Success in selling editable flyers on Etsy lies in understanding your target clientele’s needs, creating versatile and appealing designs, and offering top-notch quality. Kickstart your venture by preparing a wide range of attractive editable flyers.
27. Menu templates
Fresh out of the oven, menu templates are popular with restaurant owners to party planners who crave these editable, print-ready goodies.
These menu templates are flexible and can be tailored for cafes, restaurants, weddings, and even small business events. Therefore, begin by creating captivating designs–uniqueness sells and is editable for everyone who wants to customize it.
So preheat your digital oven – it’s time to serve up some mouth-watering menu templates on Etsy.
28. Gift tags
Digital gift tags on Etsy could light up your entrepreneurial path. With an average selling price of $5, these little printables have a big demand, particularly for special occasions like weddings and birthdays.
Ideal for individuals and businesses, this product can fit a myriad of needs from Christmas presents to children’s party favors. If you want to maximize your profits, focus on offering a wide range of designs that target different occasions and tastes.
Don’t forget to consider making a customization service that gives your customers a chance to tweak and add their personal touches.
29. Ebook Templates
Ebook templates have emerged as one of the most popular digital products on Etsy.
Beyond individual ebooks, sellers also offer a variety of creatively designed ebook templates, ebook covers, and materials for children’s books. With a target audience interested in arts and crafts, informative ebooks offer exceptional sales potential, especially those that provide professional knowledge in specific niches like graphic design or online money-making tips.
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30. Fitness Trackers
Fitness trackers‘ popularity is booming as they cater to a wide array of tracking necessities beyond just gym visits or step counting.
This product helps monitor weight loss programs, home workout plans, and 30-day challenges, effectively, becoming a one-stop-shop for holistic wellness.
They are ideal for those aiming to enhance their fitness, sleep quality, and overall productivity. With an average selling price of $5, they offer an affordable solution to digital tracking needs.
31. Debt Payoff Trackers
Debt payoff trackers are fundamental tools for efficient financial management and debt reduction. They provide a concrete visual of one’s financial obligations and illustrate the progress made toward extinguishing each debt.
This encourages a consistent habit of payment and propels individuals towards financial freedom. However, cost should not be a barrier to good financial habits, which is why our website offers a wide range of high-quality debt payoff trackers completely free of charge.
While these are still popular on Etsy, you have to realize many people want free or extremely cheap.
32. SVG Files for Cutting Machines
Scalable Vector Graphic (SVG) files for cutting machines like Circut or Silhouette, are a crafter’s dream, making them a top-tier product to sell.
You can elevate your service by including a PDF tutorial or short video guide demonstrating the use of your product.
Ensure the functionality of your products by carrying out tests prior to listing.
33. Personalized Recipe Books
Being a foodie’s ultimate treasure, these recipe collections are perfect to tickle the taste buds of amateur cooks or pro food bloggers. Plus you can create recipe book templates to be used in Goodnotes or Notability.
Cultivate your online presence to spice up the sales of your digital recipe books.
From personal experience, I bought a digital recipe book because I didn’t want to create one myself.
34. Budget Planners
Budget planners are soaring in popularity, with these nifty tools averaging quite a tidy sum of $5-20 each. Its powerful design is both lucrative for sellers and beneficial for buyers.
In an increasingly digital world, these planners provide a seamless way to stay and stick on top of your finances. From the ordinary individual aspiring to save a penny or two to the business owner meticulously monitoring their profits and expenses. Some budget planner pros, like FRGLMAMA, have made over 60,000 sales!
Here’s a pro tip: Increase your profits by bundling your budget binder with envelopes and to-do lists. Users love the convenience and it saves them a search.
35. Wall Art
Calling all artists and designers with flair! Wall Art reigns supreme on Etsy – proving it’s not just a ‘dabbling’ industry, but a potential goldmine.
Remember, the ‘Home Sweet Home’ and ‘Be Kind’ style arts still hold their charm! Maximizing profits can entail providing add-on services such as printing and shipping.
Wall art downloads make great posters, especially for those who prefer to change up their decor often.
36. Gratitude Journal
Gratitude journals, with their guided prompts and questions, make hot picks for those striving for self-improvement or simply savoring the good in life. This little gem, flourishing in popularity, provides a thoughtful juncture for folks to reflect on the positive aspects of their lives.
This digital product is tailored for therapists, life coaches, stressed corporate followers, or anyone looking to light up their lives with gratitude.
Make sure to use keywords related to gratitude and journaling in your product description to maximize visibility.
37. Self Improvement Printables
People love these printables for their blend of practicality and inspiration by giving actionable tips, uplifting affirmations, useful trackers, and more.
These self-improvement printables are timely digital products that strike a chord with a growing audience keen on personal growth, self-care, and organization.
This product is perfect for those seeking self-help workbooks, motivational quotes, fitness planners, and even kid-friendly educational materials.
Is selling digital products on Etsy still profitable?
According to legions of online entrepreneurs, the answer is a resounding YES!
As the market for digital products keeps on growing, so does the profit potential for digital sellers on Etsy.
The startup costs are delightfully low – most of what you’re paying is merely for your product’s licensing and Etsy fees. After that, it’s all pure profit!
This method could be your ticket to financial freedom. So if you’re a creative at heart with a knack for producing digital gems, it’s high time you join the Etsy bandwagon to sell your valuable creations.
Etsy passive income isn’t just a haven for handcrafted goods – it’s also a hub for downloadable products from design templates to educational materials.
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Now, What Digital Downloads to Sell on Etsy?
By now, you’ve embarked on an enlightening journey around the process of selecting digital products to sell. You have digested tips, explored examples, and refined your knowledge regarding your market, skills, and customer desires to ensure profitability.
So, let’s cut to the chase, find your product that fits the mold, craft an appealing product description, price it competitively yet profitable, and start making waves with your expertise in the digital market.
By coupling this post with the free training offered, you could be the next seller with digital products that are the next hotcake on Etsy! Will you be the next Etsy seller to learn how to make 10k a month?
Take your first step towards this entrepreneurial journey, and soon enough you could be reaping the sweet profits of your digital endeavor.
Now, start your listings and remember to believe what you have to offer is worth buying.
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For a period of a little over three years from June 2020—after covid had just broken out—to June 2023, core inflation was higher than 5%. Over the last three months, it has been lower than 5%. In September, core inflation was at 4.6%, the lowest it has been since March 2020, when it was at 3.8%. Core inflation is the inflation among the items that remain, after leaving out food, fuel and light items in the consumer price index. They form 54.1% of the overall index.
A possible explanation for the fall lies in the fact that the Reserve Bank of India (RBI) started raising the repo rate—the rate at which it lends to banks—in May 2022. Between then and now, the repo rate has gone up from 4% to 6.5%. This rise, among other things, has pushed up interest rates across the financial system.
The hope is that as interest rates go up, people and businesses cut down on their consumption, slowing down the growth in demand and the growth in wages, leading to lower inflation.
But this doesn’t happen overnight. The transmission of monetary policy of a central bank—in the form of higher interest rates slowing down consumption growth and discouraging corporates to borrow and expand—and that in turn helping control inflation, takes time. This time gap is referred to as the lag. Now, how long is the lag in the Indian case? Viral V. Acharya, while he was a deputy governor of RBI, had said in a November 2017 speech: “Monetary policy actions are felt… with a lag of 3-4 quarters on inflation.”
When RBI started raising the repo rate in May 2022, core inflation had stood at 6.2%. It continued to be above 6% until February 2023, except in July 2022 when it was at 5.95%. Since March 2023, it has been lower than 6%. Clearly, as Acharya had said, it has taken the monetary policy nearly three to four quarters to have an effect.
But one area where the higher interest rates haven’t seemed to have had an impact is in the disbursal of housing loans. From January to May 2022, before and around the time RBI started raising the repo rate, the growth in the outstanding housing loans of banks—which give out a bulk of these loans—had stood at around 13%. Post-May 2022, it has stood largely in the range of 14-16%. The increase in the months of July and August has been 37.4% and 37.7%, respectively. But this has been because of the merger of HDFC—which was a housing loan lender—with HDFC Bank. The data published by RBI on the lending done by banks by economic activity doesn’t adjust for this merger, forcing us to use June numbers.
The housing loan interest rates before May 2022 had stood at 6.5-7%. Now they are at around 8.4% to 10%, with housing loan equated monthly instalments (EMIs) having jumped 20%. But this hasn’t slowed down their disbursal. Why? The answer lies in looking at the breakdown of housing loans between priority sector loans and the non-priority loans. Priority sector housing loans are defined as: “Loans to individuals up to ₹35 lakh in metropolitan centres (with a population of 10 lakh and above) and up to ₹25 lakh in other centres… provided the overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed ₹45 lakh and ₹30 lakh, respectively.” The remaining loans are non-priority loans.
In the months leading up to May 2022, priority sector housing loans formed around 35-36% of the overall outstanding housing loans of banks. By June 2023, they had fallen to 31.5%, implying that banks are giving out more non-priority housing loans. Of course, these loans are largely taken on by the well-to-do, who do not get impacted much by the rise in EMIs.
In fact, the outstanding priority sector housing loans of banks from January to June have been just 1-2% higher than during the same months in 2022. When it comes to non-priority housing loans of banks, they have been around 22% higher from January to June in comparison to the same months in 2022.
Further, the percentages don’t explain this inequality well enough. The outstanding priority sector housing loans from June 2022 to June 2023 went up by ₹137.76 billion. In comparison, the non-priority sector housing loans went up by ₹2.47 trillion, nearly 17 times more. To be fair, this anomaly existed even before the Reserve Bank started raising rates, but it has only got worse, primarily because real estate in the formal sector continues to remain very expensive and the fact that prices of high-end real estate have rallied in the last 12-18 months.
Of course, actions of central banks have consequences. Things don’t always work in just one direction. The trouble is that the other direction rarely gets talked about. When RBI and almost every other central bank pushed rates down post-covid, it led to massive bubbles in stocks and cryptos and higher inflation. But there was very little talk about these bubbles in the communications of central banks. Now, as RBI has raised rates, the not-so-well-to-do have been pushed out even further from the housing markets, and there is very little talk about this K-shaped impact. Like the part does not always reflect the whole, the whole also rarely reflects all the parts.
Just when everything looked oh so good in housing, a new report has revealed that investors have already lost interest.
The latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey found that so-called “investor participation” in the housing market slipped to 21.9% of all transactions in July, down from 23.5% in June.
It hit a two-year high as recently as May, when investors scooped up more than a quarter (25.3%) of all transactions.
So why the sudden reversal? Well, survey respondents have pointed to higher home prices, which cut into investors’ profits.
After all, they work on tight margins, so if the pricing isn’t just right, it doesn’t make for a good investment.
Some respondents even noted that the “smart money” has left the housing market, and it’s now “dumb” investors stepping in.
That last comment came from a real estate agent in Arizona, where home prices have been on a tear in the past year.
In fact, recent home price appreciation has pushed negative equity levels there from 55.5% to 51.6% in just one quarter, according to a recent report from Zillow.
It’s great news for existing owners and those who recently purchased, but bad news for investors looking for a bargain.
Another agent in Florida said “rookie investors” were moving in and paying too much for properties, which sounds like another bubble all over again.
Existing Homeowners Still Pumped About Housing
While investor sentiment has shifted, existing homeowners still seem to be pretty amped about housing.
They accounted for 43.5% of home purchases in July, up from 42% in June and 40.3% in May.
Participation by first-time home buyers was flat month-to-month.
It’s likely that demand is being driven in part by the record low mortgage rates, which have made it very attractive to own versus rent in many parts of the country.
But Campbell Surveys research director Thomas Popik warned that a reversal in rates could lead to another flood of distressed properties, and a subsequent drop in home prices.
Of course, the distressed supply has been dropping as of late, with only a 42.2% share in July, down from 45.1% in June and 46.1% in May.
And in many hot markets across the country, inventory is so low that prospective homebuyers have no choice but to wait for properties to come to market.
Even if there are suitable properties, many are clouded by intense bidding wars, so it’s clear that swelling inventory isn’t a huge concern, at least for the moment.
Homeownership Rate Lowest in Nearly 50 Years
Meanwhile, the “real homeownership rate,” which is the percentage of households who own a home and are not 90 days or more behind on their mortgage, fell to the lowest point in nearly half a century, per a report from John Burns Real Estate Consulting.
The company said the Census Bureau’s 65.5% homeownership rate is grossly overstated, and the actual rate is closer to 62.1%.
Historically, this spread is just below 1%, as there are still distressed homeowners, even when things are golden.
Obviously it has widened considerably thanks to the ongoing mortgage crisis, but they believe housing will make a serious comeback.
Their survey of 20,000 “confirms that the American dream of homeownership is as strong as ever.”
Additionally, they have started to see foreclosed homeowners return as home buyers after the three-year waiting period required by most banks and mortgage lenders.
This is especially prevalent in parts of the country where the foreclosure process runs more smoothly, such as in Arizona and Texas.
So if you believe the homeownership rate will climb back over time, there will certainly be plenty of demand in coming years, and with that, ideally some decent home price appreciation for those who get in early.
Sure, it won’t happen overnight, but a good time to believe in housing is at a time when no one else does.
