Over the last year, the housing market in America has been hotter than ever before. In many ways, it overheated with no signs of stopping. What exactly does this mean for homebuyers and sellers in America, and what should you be looking for in the coming months?
Get a better understanding of what’s been going on in America’s housing market, what things look like today, and what the market’s future might look like.
America’s Super Hot Market: Why?
During the COVID-19 pandemic, the American housing market started to heat up as buyers were competing more than ever before for inventory, and real estate entrepreneurs and sellers were able to make more money than they ever imagined from selling property.
Why did this happen?
There were several contributing factors that created the perfect hot housing market:
- Very low inventory
- More people wanting to move out of cities into less crowded areas
- Low-interest rates
The combination of these factors and some other economic situations in America led to a housing boom that few could have expected. Homes were selling at record speed at record high prices, and the market remained this way for more than a year. Even during fall and winter months when the market historically slows down, things remained hot in the fall and winter of 2020 into 2021.
What’s The Market Like Now?
Many potential homebuyers are wondering if, and when, things will noticeably cool down. Lucky for them, real estate experts believe that the market is moving from incredibly overheated down to a more normal level of heat.
Inventory is gradually increasing again as sale times increase and price increases get smaller from month to month. While the year-over-year averages for prices are still high, the rate that home prices were rising has decreased significantly since the start of 2021.
Panic buying should begin to subside, and this means that price increases will not be as rapid. Prices will continue to rise as they generally do from year to year, but the rate of change will not be so intimidating or worrying for analysts.
What does this mean for buyers?
This means that the market might be less overwhelming to enter in the coming months. While fall is unlikely to cool off the market completely, things may be more accessible to buyers who cannot enter the overheating market.
The market is still a seller’s market, and it is likely to remain a seller’s market for the foreseeable future as we tackle the effects of the Delta variant across the country and more companies continue to grow their work-from-home models.
Are Interest Rates Going To Remain Low?
For now, interest rates continue to remain lower than they have been in a long time, which is great for potential homebuyers. There isn’t an exact date when these rates will change, but you can likely secure a good rate from banks and other loan partners for at least the remainder of the year.
Some analysts suggest that the rates will climb between .5% and 1% during 2022. Any potential buyers who want to take advantage of the rates should keep that prediction in mind as it is important to include this type of information in your preparations when getting ready to buy.
What will happen after that time, however, is still unknown. It is unlikely that the rates will simply kick back up overnight, however, so this should not be a primary concern for homebuyers at this time.
Handling The Hot Market
With things so hot, many buyers were afraid to jump in. Some of those that did were completely overwhelmed by bidding wars and sky-high prices they didn’t expect to pay.
The process of buying a house can be overwhelming, and it was even more so during the worst of things. It’s essential to work with a good real estate agent and be fully aware of the entire buying process from start to finish. Having these details nailed down will make things less stressful where possible.
If you’re planning on buying new construction, prepare for the process by doing research beforehand. Even this market can be quite competitive at times, especially with the lumber shortages affecting things in the last two years.
The bottom line of how to handle things is to do what you can to be prepared. From ensuring you have the money needed on hand to the right loan approvals, preparations will be your best chance of success in a hot market.
Make sure that you know your down payment, loan, and closing cost options and how you would finance these things when purchasing a home. These costs are not small, and you could easily lose a deal if you cannot move quickly because you don’t have this information prepared. Before you enter the market, get your finances ready.
Otherwise, the hot market might steal your dream home away from you for good.