Home Prices Are Leveling
The real estate market’s bull run has been something truly impressive to witness. In June, median home prices hit all-time highs, which is a far cry from where many thought prices would be at the start of the pandemic. Some predicted that home prices would collapse because of the pandemic. However, historically low mortgage rates created extreme demand from home buyers while housing inventory fell to historic lows. Rising prices have been great for homeowners who have seen their equity increase dramatically over the past year. For home buyers, rising home prices have made their journey to buy their dream home rather difficult. Home buyers have had to contend with constant bidding wars and houses selling for far more than the original asking price. Thankfully, real estate market conditions are changing. There is good evidence that housing prices are leveling off and it is a great time for home buyers.
Experts Predict Home Prices Will Moderate Soon
As long as home buyer demand remains sky high and inventory remains limited, prices will continue to increase. Thankfully, there are some signs that price trends will slow significantly and instead of the market being red-hot, it will be merely warm.
First, it looks like demand is slowing. Over the past year, demand from home buyers has been driven by low mortgage rates. However, there are indications that demand is starting to taper off. Recent tapering is not due to mortgage rates increasing. Recently, the Federal Reserve decided to freeze interest rates at their current levels over fears of the continuing pandemic. In turn, this is keeping mortgage rates at their rock bottom levels. The reason why demand is tapering off is because many home buyers, especially first-time home buyers are being priced out of the market.
Secondly, it looks like the supply of homes is increasing. According to Lawrence Yun, chief economist for the National Association of Realtors, supply appears to be increasing across the board. Recent data indicates that housing inventory is up about 38% from record lows that were recorded in April. This is all great news in the short-term. The long-term trends are also looking good for inventory. New housing starts are up to three-month highs as of the latest data released in June. As supply increases, there will be more houses available to meet the demands of home buyers, which will keep home prices from skyrocketing.
Conditions Improving for Home Buyers
Home buyers do not have to wait for the future for home buying conditions to improve. There is already discernible evidence that conditions are prime for house hunters right now. Bidding wars are on the decline. According to Redfin, about 60% of home sales in July faced competition from multiple buyers. While 60% is still a lot, it represents two straight months of declining numbers. In April bidding wars were at their peak levels since the beginning of the pandemic. Back then about 74% of all home sales had bidding wars. July’s numbers are actually the lowest they have been since January of this year. The numbers do not lie. Conditions have improved for home buyers and they are only getting better.
Final Thoughts
Home buyers have faced frustrating conditions over the past year, but those times seem to be behind us. The data is fairly clear that home prices are stabilizing even as mortgage rates stay at rock bottom levels. Home buyers should be rejoicing at the news. The end of rising prices is upon, but the era of low mortgage rates is still around. This allows anyone who is looking for the house of their dreams to get their ducks in a row and buy a home while real estate conditions are favorable.
One of the best things you can do right now to take advantage of today’s plateauing prices is getting pre-qualified for a mortgage. Getting pre-qualified for a mortgage will let you strike while the iron is hot and put yourself in the best position possible to capitalize on any house you’re interested in. If you are interested in trying to get pre-qualified for a mortgage, contact us. We offer a complimentary mortgage qualifier to anyone who is interested. Peoples Choice Mortgage believes that everyone deserves to be a homeowner. To that end, we would love to meet with you and help you find a mortgage plan that works for your needs and your financial situation. However, it is important to act now. The real estate market is constantly changing. Just because things are favorable today, it does not mean that they will be that way forever.
