Huge Shift Coming to the Real Estate Market!
We all know that the market has carried an immense amount of energy into the year 2021, but what does that mean for the upcoming year? When will we see a change in the market? When will prices become more affordable for those searching? These are all questions that are currently circulating, but we may have some answers for you! According to Lance Lambert, the best way to describe the current market is ‘breakneck.’ We are dealing with a time in history where home values have set a record, and it is assumed that the tide is turning. Now, we just have to determine if it is a good thing or not.
When the pandemic started, there was an abundance of buyers that crushed housing inventory, with that number continuously taking a pitfall. In April of 2021, inventory was down by over 50%. However, we are witnessing a slight change within the market, which helps change the predictions for the coming year, 2022. As of now, we are starting to see the market cooling down and shifting a bit in the buyer’s favor. Although this is great to hear as a potential buyer, why is there a sudden cooling in the market?
Homebuyers are now reluctant to pay top dollar. Many believe the market to have been, “too hot for its good.” Considering this, home shoppers have now hit an ‘invisible’ price ceiling, and refuse to pay top dollar in a low-inventory market.Would you pay $20-30K over the asking price for a home that doesn’t check all of your wants and needs? Buyers are becoming exhausted with the market, and they find it hard to find the perfect home. A survey created by the chief economist at Zonda shows that 61% of builders are seeing more resistance from homebuyers. To be fair, this resistance is expected, as home prices cannot continue to grow at a 17% year-over-year rate. I mean, the housing budget can only stretch so far.
Taking all of this into account, we are predicting the market to continuously cool down as the last of the stimulus protections begin to lapse. The foreclosure moratorium came to an end in July and the mortgage forbearance program will be next, ending at the end of this month. Homeowners who are hurting financially may opt to sell their homes rather than restart their mortgage payments, which would increase inventory.
Remember, a cooling market doesn’t always mean that prices will take a pitfall, and a recent study conducted by CoreLogic predicts home prices will jump another 3.2% by June 2022. This is still a seller’s market. The cooling that we are experiencing is a decrease in bidding wars. Now, homes are still getting scooped up by buyers within hours of being on the market, but there has been a soft decline in how many of these are sent into a bidding war.
All in all, we predict the market to continuously cool, sending it into a buyer’s market by the end of 2022. With buyers refusing to pay astronomical prices for homes that will lose their value, we will see a slight softening. So, if you are searching for your first home in a seller’s market, you will need the help of a real estate professional. They will help guide you through and hopefully find you the home of your dreams. If you are hesitant about purchasing a home, be patient.