Which Way Will the Market Go and How Will It Affect Buyers?

Nobody is surprised by accounts of run-down properties selling for record-high prices, multiple bids within hours of being listed on MLS, and hyper-competitive purchasers throwing in extras to sweeten the deal. The surge in demand over the last year and a half has been attributed to the pandemic.

Now that the US is returning to normal in many regions, customers who were previously frustrated by limited inventory and fierce competition may reconsider. Unlike other years, after Memorial Day, the market may remain lively in many places. Is it time to start shopping for your next house, if you’re a buyer?

Many current estimates for the second half of 2021 suggest yes. The health of the US real estate market is unpredictable, but there are some signs that things may be returning to normal. Here are some key points from the latest expert analysis.
Recent data imply buyer demand is slowing.
The US Commerce Department recently reported that demand for single-family houses fell 5.9% in May, a year low. While this reduction is significant, it must be viewed in the context of an unusually hot real estate market.

Reduced buyer demand may be due to:

Vaccine availability increased, allowing people to enjoy summer travel and social events while putting their home search on hold. Disruptions to pandemic-related tasks, such as home searches, while distant workers return to work. Analyze potential long-distance moves or shifts in short-term priorities.

With demand slowing, inventories are expected to rise, albeit modestly. This may assist overcome some of the buyer competition. While they may still be paying more than a year or two ago due to rising home values, purchasers may not have to pay as much if there are fewer buyers. Meanwhile, more sellers are willing to sell.

During the epidemic, homeowners stayed off the market for several reasons. Some dreaded strangers entering their home, while others dreaded moving their entire belongings from one house to another in an uncertain period.

Many sellers were scared to list their homes, fearing they wouldn’t be able to find a buyer. For example, luxury properties have extremely limited inventories.

Others, attracted by the lure of higher equity, chose to hold their cards until they saw how high local market valuations rose. Many of those sellers have now determined the market is nearing its peak, and they are ready to sell.

According to some data, new listings jumped 6.7% month-over-month in June, with 54 of the top 100 areas seeing a gain. This is good news for purchasers since it will assist to relax inventory and slow price hikes.
Inflation will be contained and mortgage rates will remain below pre-pandemic levels.
Despite rising from record epidemic lows, interest rates are expected to remain in the low 3’s throughout 2021. This is fantastic news for purchasers who are already stretched to buy homes at record-high costs.

As interest rates rise, purchasers should shop around for the best mortgage, comparing numerous lenders if required. Buyers should also read the fine print to understand how fees, which vary widely between lenders, affect their ultimate buying cost.

Also, now is not the time to use home-buying savings. With rising home prices and interest rates, buyers may need more than expected to complete their home purchase.
While prices will likely stay high, some of the frantic rivalries may ease.
Overall, a more stable market is excellent news for everyone and may help relieve some of the burdens on purchasers who have lost out in multiple offer scenarios in the past. According to a Houses.com poll, the next six months should see more inventory and availability of homes at various price ranges, which is excellent news for those who feared being priced out of the market.

The study also indicated that more sellers planned to make modifications to their houses before selling them. That means more move-in ready homes in the second half of 2021.

Whatever stage of the house buying process you’re in, now is the time to get down with your trusted real estate agent or broker and start calculating the figures for yourself. No one knows your local market better than they do, and no one is better suited to help you make future judgments.