It’s hard to believe we are in the middle of August already. I’m going to start with my view of the current market and then what I see coming in the second half of this year.
This year’s real estate market has been exceptionally strong in virtually every town across the country. Millennials nearing their peak homebuying years are fueling a residential housing boom. Low mortgage rates combined with an increase in work-from-home opportunities, have fueled a surge in housing demand. Many homebuyers are looking to lock in their monthly housing payments by taking advantage of still-low mortgage rates.
At the beginning of June – buyer demand started to wane a little bit. Some buyers were thinking it wasn’t the right time to buy and others were experiencing buyer fatigue. Record high price appreciation, multiple bidding wars, record low inventory caused some buyers to pull back and take a break. Helping buyers understand the current market, and why they need to stay in the hunt for a home even though it can be frustrating, but it is very important. Home prices are not likely to be going down. All forecasts are saying that homes are going to be more expensive and interest rates are going up. We are in a seller’s market; a buyer’s market is not coming back any time soon.
This year we saw new listings coming on the market in May and June that show sellers were entering the market historically later in the season. This could mean we’ll be seeing home buying continuing into the fall as buyers jump at new opportunities. As fall rounds out, I do expect many buyers who took a hiatus during June, July and August to come back into the market.
Talking points for a seller! Sellers – it’s never been a better time to sell. Prep, stage and price your house according to what the market will bear – is still extremely important today. While home prices are still rising at a double-digit rate, they have likely passed their peak growth rate.
Looking at the national market for the second half of this year, sales are forecasted to increase nicely this year and next as compared to last year. 6.5 million homes sold in this country last year, the forecast for this year is close to 7 million homes. The biggest challenge to reaching the forecast is low inventory. We cannot sell homes that we don’t have.
Is this a house bubble? A “housing bubble” is formed by the artificially and unsustainably high prices of an already hot housing market – like the one we have been experiencing over months. The housing industry and its economic factors depend on supply and demand. The bubble starts forming when demand for property rises and supply begins to diminish; a combination that can only lead to price hikes. As inventories shrink, anxious buyers start paying more for properties that are already selling much beyond the market value. In 2021, home prices have been rising at the highest rate in history, outpacing even the housing bubble preceding the Great Recession. This is, however, most likely not a bubble. Today’s housing market is not at all like the mid-2000’s bubble that ruined the US economy. During the last boom, home demand was artificially boosted by the fact that some people with little or no income could obtain loans. This time, lenders are acting much more responsibly. There is little leverage, and mortgage underwriting is considerably better than it was during the Great Recession.
Home: - What does “Home” mean for most people. What people wanted before the pandemic to what they want now has changed. We’ve lived at home for the past 15 months, we’ve worked at home, we’ve worked out of home, we’ve eaten at home, we’ve educated at home…. home has a whole new meaning.
As always, I’m grateful for each and every client, and in being the educator one needs to guide you through the selling or buying process. If you are considering making a move, please reach out to me – I’m at your service.
“To give real service, you must add something which cannot be bought or measured with money, and that is sincerity and integrity” - Douglas Adams
Best,
Barbara
