Thinking of dipping your toes in the real estate market soon? You’re not alone.
Buyers and sellers alike are all keen to take advantage of the perks the housing market presents — whether it be high home prices for sellers or low-interest rates for buyers.
However, the real estate market is ever-changing, so you’ll want to keep reading to see what trends top real estate agents are expecting in the coming months.
Buyers will pull out of deals due to high prices
It’s no secret prices are extremely high in the current housing market. While this may seem positive for current sellers, HomeLight’s Summer / Fall Report may suggest that buyers are pulling out of deals all across the nation.
Here’s how it usually goes. Buyers head to the bidding wars, knowing they’ll need to offer well-above asking price for the home they want. Equipped with an ‘I’ll offer anything” attitude, they win. For a moment, all is fine and dandy — until buyers are left with weeks to crunch the numbers and wonder whether the obscenely high price they’re about to pay is worth it. Ultimately, they end up pulling out.
You may think this isn’t an issue for sellers. After all, eventually, the house will go back on the market and other buyers will have to bid for it. However, whenever a deal falls through on a home, other buyers in the area are free to wonder what’s wrong with it — why would the buyer pull out?
Bidding wars may have reached their peak
For the last year, bidding wars have been on the rise across the nation, but this trend may be dying down. Only 37% percent of top real estate agents claim bidding wars are on the rise in their respective markets — down from 52% last quarter.
This suggests bidding wars may have hit a ceiling. Real estate agents, who were seeing 20-plus offers on every listing, are now only seeing about 5 or so per listing. This has also led many sellers — who may have entered the market slightly too arrogant — to reduce the price of their homes.
Clearly, buyers, though eager to find a new home, are willing to wait until prices drop and inventory increases — instead of paying outrageously high prices.
Sellers will no longer be held back by health concerns
Now that the COVID-19 vaccine is universally available across the country, sellers are no longer fearful of entering the real estate market. While the pandemic certainly had many sellers wary of letting crowds of buyers enter their home, that fear was lessened thanks to the vaccine.
The pandemic is in no means entirely behind us, but the vaccine is helping to bring down infection numbers, leaving sellers much more confident. Real estate experts are expecting this to increase supply and lower home prices, but potential buyers should also be wary of rising mortgage interest rates as well.
Price volatility will put restraints on the new construction market.
Thanks to the pandemic, buyers are seeking large homes with sprawling acerage — just in case we’re all forced back inside for another lock-down. That means home builders are seeing prices for materials skyrocket across the country, as demand for large homes increase.
In HomeLight’s survey, 55.5% of agents claimed builders are having to increase prices due to material costs. This has led buyers to drop out of contracts, as construction of a new home may be obscenely more expensive than they once thought.
Buyers will rush to lock in low mortgage rates
As the economy reopens and improves, buyers know the days of record low mortgage rates won’t last. Therefore, they’re forced to rush to the market — sometimes without the funds to compete.
Many buyers are relying on these low mortgage rates to afford a home, despite home prices being rather high all across the country.
While bidding wars may be peaking, they’re still currently going strong. Sellers would much rather accept a cash offer than go with someone whose financing could be on the cusp of falling through if mortgage rates rise. This puts buyers, who couldn’t afford a home without these mortgage rates, on a strict time limit. Luckily, so long as buyers find a trusted real estate agent, they should have no problem closing on a home quickly.