If you’re at all interested in the real estate market, then you probably know what unprecedented conditions the COVID-19 pandemic brought upon the industry. Home prices and bidding wars are high, while inventory is low — yet mortgage rates are so favorable buyers are still surging to the market in record numbers.
However, top real estate agents see these trends shift across the country. Whether you’re a potential buyer or seller, you’ll want to stay informed on these changes if you’re thinking of dipping your toes in the housing market soon.
High prices will encourage buyers to drop out of deals.
For the past year, home prices have been rising across the country, which is no surprise when supply has been so low and demand so high. However, while this may seem like a great incentive for sellers to enter the market, the conditions are actually encouraging buyers to drop out of deals.
You may think — that’s not a problem. When one buyer drops out, plenty of others are still searching for new homes. However, when buyers do pull out of the home sale, and the house goes back on the market, other buyers are free to let their minds wander. What was wrong with the home? Why did the buyer pull out?
If you’re listing your home too high while selling your home, you may have to deal with buyers dropping out of deals at the last minute, your home being on the market for a long time and buyers with the impression that there’s something undesirable about your property.
Bidding wars will hit the ceiling.
Thanks to extremely high demand and meager inventory, bidding wars have been on the rise for the last year. Many real estate agents reported 20-plus bids per listing. This quarter only 37% of real estate agents claimed bidding wars are on the rise — down from 52% last quarter — and real estate agents are only reporting about 5 bids per home.
Along with the decrease in bidding wars, real estate agents have noted that many sellers have had to reduce the price of their homes. Clearly, buyers are no longer willing to pay such high prices — opting to wait until prices drop instead.
Sellers will no longer be held back by health concerns.
The reason for such low inventory? Sellers, wary of letting a deadly virus enter their homes, decided to wait out the pandemic. While the pandemic isn’t entirely behind us, the vaccine has helped reduce infection rates across the country and diminished most sellers’ fears.
When sellers start coming back to the market, supply will increase, and home prices will eventually drop. While this may seem like good news for buyers, we shouldn’t expect the low interest rates to continue.
Buyers will rush to lock in low mortgage rates.
As the economy improves, buyers should be aware that the low mortgage rates they’ve enjoyed won’t last much longer.
While home prices may be high, the low mortgage rates have actually made homes more affordable than ever. Therefore, expect buyers to rush to the market to take advantage of these low mortgage rates while they still can. If you’re a buyer, you’ll want to contact a real estate agent as soon as possible in order to start your home-buying process.