The past year and half has been a wild ride for most people. The far-reaching effects of the pandemic have been felt on almost every level. In real estate, those effects have largely contributed to the state of the present housing market. We have seen houses hit MLS one minute only to be pending under contract the next, basic or even below average homes being sold at skyrocket prices, incredibly low inventory that has allowed for extremely competitive multiple offer situations, and deep frustration all around.
Fortunately, however, we are beginning to see the tide turn and are coming back to some form of normalcy in the world. Disheartened buyers are once again looking out for new homes with a fresh hope of better prospects. So, this begs the questions, is it the right time to rejoin the house hunting scene and finally find your much sought-after home? We are leaning toward yes. Although one cannot truly make accurate predictions of what the housing market will be like at every turn, we certainly can consider the indicators that tell us that the market we are previously more accustomed to is just around the corner. Here are some of the main factors to take into account while analyzing how the housing market will change.
As demand may decrease, supply tends to increase.
Recently, research and data suggested that the buyer’s demand of single-family residences has slowly began to decline as of May. While there may be several reasons as to why buyers are taking a break from their house search, few of them might include: lifting of COVID related travel restrictions, a return to regular, pre-pandemic workflow, and a reconsideration of big, real estate driven moves. We all know and have heavily felt the disruption COVID-19 caused to our daily lives and overall well-beings. Lockdown after lockdown, mask after mask, fear and anxiety were on an ultimate high. As if that were not enough, travel was essentially shut down for unknown lengths of time. In the same way that being stuck in their homes caused buyers to consider selling and buying a new house, now we see that as the COVID vaccine made its debut and travel bans were lifted in most places, that buyers who are getting back to normal travel plans and vacations are not thinking of selling or buying. Additionally, since workplaces allowed many employees to transition into work-from-home positions for the majority of the year are now having employees return to the office, it might have put a halt to the free time that some people had to conduct their search for a new home. Ultimately, we see that people are rethinking their prior decisions to buy or sell their home and are planning out what might be better next steps. What happens to the housing market when we see the demand of homes decreasing is that we will begin to see the supply increase. It might not be all of a sudden, and it may not bring the house values down right away, but there will steadily be a greater inventory than there is now which will lessen the brutality of those multiple offer competitions.
More sellers are getting ready to sell.
As there were many reasons why we saw an influx of buyers in the past couple of years, there are also several reasons why people may have been hesitant to sell. Perhaps we can thank fear and anxiety for that again, as most people might not have been ready to put their house on the market in a time when there was so much uncertainty in the air. Along with all the germs they feared were in the air, too. Putting your house up for sale and allowing all kinds of people to be in and out of your home for showings during a time when no one knew who might be sick is definitely a less than ideal situation. Selling your home is emotional and overwhelming as it is without the fear of contracting a deadly virus, so, it’s understandable why many sellers have stayed out of the game for so long. Furthermore, with inventory being low, surely many sellers wanted to wait to sell their house until they knew for sure they would have a home to live in after. Then we have the sellers who probably saw that home values were rapidly increasing and wanted to wait until it was high enough that they could sell their home at a price that was of great advantage to them. Since all this is beginning to turn around, it’s no wonder that sellers are coming out of the woodworks and are finally ready to cash out. Data indicates that the housing market is seeing a rise in seller activity by around 6.7 percent each month as of June, which is fantastic news for buyers.
Mortgage rates are remaining relatively low for 2021.
Another area that has been touched by the pandemic is low mortgage interest rates. While that may hold steady for some time and will rise slowly, experts predict that interest rates are expected to stay in the low 3’s till the end of 2021. Which is a great benefit to buyers considering the ultra-high house values. Although rates will increase gradually, it is still important for homebuyers to search around for the lender that will best meet their needs. This includes comparing multiple lenders and their offers and making sure they understand exactly what all the fees are and how it will affect them. Moreover, it is vital that buyers prepare to budget for more costs than what they originally planned for in order to make it to closing day.
A more stable housing market means less competition.
One of the major side effects buyers suffer during a seller’s market is losing out to the intense competition during a multiple offer situation. Sometimes, you can only do so much and make your offer as competitive as possible, but when you’re up against 30-40 other offers, your chances of winning decrease fast. As the housing market slowly makes a turn toward a more balanced and stable market, we will begin to see a larger inventory of homes set at varying price points which should put both buyers and sellers in high spirits and less tension.
Wherever you may be in your real estate journey, I guarantee you there is no better time than the present to find an excellent real estate agent and go over all of your needs and concerns with them. They are there to guide you and advocate for your best interests and there is no one more equipped for the task than a good agent. If you are in need of a great agent, feel free to connect with Dory Joseph, broker of DRJ Real Estate, for an initial meeting where she’d be happy to answer all of your questions and help you understand all that is available to you whether you are a buyer or a seller. Additionally, Dory Joseph has created an excellent class specific to buyers that covers everything from credit to closing. Click here to utilize this incredible resource today!