Maybe you’re been on the market for your new family home for quite some time. Maybe you’ve been incentivized by low mortgage rates. Or maybe you and your family are desperately in need for more space thanks to the pandemic.
No matter what your reason — many buyers are surging to the housing market in hopes of purchasing a new home. The only problem: astronomical home prices. Though, as our economy heals from the pandemic, there’s one question buyers need to know: will home prices eventually fall?
Current housing market: the seller’s market
When COVID-19 hit our shores, the real estate market quickly changed. Demand was high, while supply was extremely low. Thanks to increasing incentives for buyers to enter the market despite the competition, bidding wars increased and home prices rose.
Even now, as the economy reopens and slowly improves, house prices are still very high. In fact, 95% of real estate agents — according to HomeLight’s Summer / Fall Report — claim home prices are still on the rise in their market, while 94% note that low interest rates are continuing to boost buyer demand across the country.
We shouldn’t see these conditions disappear quickly. Over the next 6 months, the majority of real estate agents (67%) predict home values will continue to rise, however, there are some current trends that — should they continue — may spark lower home prices.
Bidding wars may have hit their peak
Over the past year, real estate agents have reported 20-plus bids per listing, which has made the real estate market ridiculously competitive. Recently, however, 54% of real estate agents claimed bidding wars have reached their peak in their respective markets. In fact, most report only about 5 bids per home in recent weeks.
This indicates that buyers are no longer willing to pay ridiculous prices to compete with others in their market. While home prices are still high, real estate agents are also reporting many sellers reducing the price of their home — but mostly these are sellers who overpriced their home from the get-go.
Clearly, buyers have put their foot down, opting to wait until prices taper out in their market. If this trend continues, we may see prices dropping in the near future.
Sellers will no longer be held back by health concerns
One of the biggest reasons for high home prices? Lack of supply.
This was mostly caused by seller wariness during the COVID-19 pandemic, After all, selling a home can involve a lot of foot traffic in and out of your home, so the risk of bringing a deadly virus into their family home stopped sellers in their tracks. While this concern was extremely valid, the vaccine distribution has seemed to calm those fears.
Sellers are more than ready to enter back into the market now that the vaccine has helped reduce infection rates across the country. The effect won’t be immediate, but as more inventory arrives to the market, buyers will likely see prices slowly fall.
Comments