There’s something to be said about an industry that manages to stay afloat while the rest of the country is in turmoil, don’t you think? For the past 18 months, the real estate industry has seen a flood of buyers entering the market because of the low interest rates bestowed upon us by the Fed. People have been buying houses at breakneck speeds just so they can finally buy the home they’ve been dreaming of at a lower rate, thus saving a significant amount of money – despite housing prices.
All of that aside, we have to wonder what the future holds going into the second half of the year. To get an idea, let’s take a look at top agent insights and what factors could influence the
1. High prices halts demand
If you’ve looked at the market throughout the past year and a half, you could see the housing prices get higher and higher. At one point, buyers didn’t look twice about snatching them up at whatever price, but now? Now prices have increased so much that 54.4% of realtors say they’re seeing buyers back out of contracts once the realization hits them as to just how much they’ll be spending!
2. Bidding wars have reached their peak
Part of the reason housing prices were getting higher and higher was because bidding wars were happening a lot more frequently. However, today, 54% of realtors say those bidding wars aren’t happening quite as frequently. Not only is this because the prices are getting so high and the average buyer is being priced out of the market, but there are more houses coming onto the market.
During the fourth quarter of 2020, 52% of real estate agents said bidding wars in their market were becoming more and more common. That isn’t necessarily the case for the second part of 2021. According to 54% of real estate agents, bidding wars are at their peak right now, but as more houses come onto the market, those bidding wars are going to be few and far between.
Instead of properties receiving dozens of offers that the seller can sift through, agents say properties are only getting a small handful of offers. A seller could look at a few offers and use them to see how much of a profit they could make with each offer and choose the best one of the bunch.
3. Housing inventory replenishes as health concerns diminish
Across the country people are receiving the vaccine and the prospect of the public health crisis coming to an end is giving homeowners the opportunity they’ve been waiting for. 32.9% of realtors are seeing that homeowners are less concerned about contracting the virus and so they’re eager to put their houses on the market – especially once they use a net proceeds calculator and see how much of a profit can be made!
4. Price volatility drives the new construction market
You’d think that if you can’t find the home of your dreams, it would probably be cheaper to build your own than it would be to buy an existing home and tackle a bunch of renovation projects to get it just the way you want it. Right? A few years ago, maybe. Today? Not at all. April 2020, the cost of lumber was $350 per thousand board feet. Fast forward to April 2021 and the price for that same lumber increased to $1,200 per thousand board feet. That’s just the lumber! Imagine how much more other materials and labor costs are now compared to a year ago.
5. Pay with cash, win the bid
As much as we want to think that every offer is carefully considered by the seller, that’s not true. If someone says they’re going to pay cash, that offer is probably going to get accepted. Who would turn down cold hard cash that they could have in their hand today? Realtors are experiencing an influx of cash buyers and the buyers that need financing are losing the bid, which means they have to start the search all over again. If that happens enough, buyers may stop looking all together.
The future of the real estate market is always changing, there’s no denying that. However when realtors share their insight about where the market is heading, it’s a good idea that we take heed if we plan on buying (or selling) any property anytime soon. It’s the smart thing to do.