This year, the real estate market was full of risks. Because people could work from home, demand was high in all U.S. markets, prices went through the roof, and there were often bidding wars. At the time, it was hard for buyers.
It looks like the weather and the real estate market are both cooling down at the same time, which is a nice change from the heat in Texas.
So there’s no doubt about it, this doesn’t mean that a buyer’s market is coming soon or that prices will start to go down soon. The data do show that the domestic market is smaller than what buyers saw in the first half of this year. Oak Park Guarantee a loan for those whoever needed it.
Greg Aponte, who is in charge of business analytics and data science at the real estate platform Orchard, says, “The real estate market is way down from where it was last year, especially in the spring and winter.” Even though it’s not perfect, it’s better than before.
What could it mean? Do you think now or even in 2022 is a good time to buy a house? Here’s what to look forward to.
Slowed growth in home prices
Prices for homes have gone up a lot in the past year. Realtor.com says that property prices for active listings rose 17.2 percent in April compared to the same time last year. In October, the growth rate went down to 8.6%.
The good news is that analysts expect slow growth to continue in 2022. CoreLogic, a data company, says that the rate of annual price increases will slow to 2.2% by the end of September. Other groups, such as mortgage buyers Freddie Mac and the Mortgage Bankers Association, think that prices will go up by between 5 and 7 percent overall by 2022.
“When you look at these numbers, it’s not hard to figure out that the market is slowing down. It does show, though, that the housing market is getting better.” According to Marcus Larrea, who works at Palm Paradise Real Estate in Florida as an associate broker. A stable, well-balanced market usually goes up in value by about 3 percent per year.
Another good sign is the rise in price cuts over the past three months, or the number of listings whose prices are being cut before they are sold. According to data from Realtor.com, the number of listings whose prices have been cut is now higher than it was in 2016.
Ads that cost less
First of all, the number of homes for sale has gone up in the last three months of the year. A real estate company called Redfin says that the number of newly listed homes in the “most affordable” category, which has a median price of $126,500, has gone up by 32%. The number of “cheap” listings with a median price of $110,000 went up by 16 percent.
Redfin’s study shows that a big reason for this must be that many homeowners’ mortgage forbearance programs are coming to an end. The CARES Act gave homeowners in need the option of forbearance, which meant that some didn’t have to pay their mortgages for up to 18 months because of a pandemic. When these options are no longer available, homeowners who still can’t make ends meet sell their homes to pay their mortgages.
Buyers who are thinking about buying a home may benefit from the rise in listings, but there is a very important caveat: the market as a whole has a low supply of homes. Freddie Mac says that the United States needs more than four million more homes.
“It will be a long time before there are enough houses to meet the demand,” says Andreis Bergeron, head of brokerage operations at Awning, a company that makes technology for real estate.
Less fighting over prices
This year, almost three out of every four people who bought something took part in a bidding war. It’s October. In 2021, the number dropped to 59 percent, which was the lowest it had ever been.
Even though it’s still higher than in 2020 (and before the epidemic), it’s different from two months ago. Consumers may be able to buy houses without being so aggressive as to skip home inspections or make bids that are much higher than the asking price.
Glenn Phillips, CEO of Lake Properties Realty, says that the number of homes that get multiple offers that are much higher than the asking price has gone down in most parts of the country. “This trend hasn’t stopped, but it happens less often now, and people aren’t bidding too much.”
OJO Labs, a company that makes software for the real estate market, says that only 41% of properties sold during the month went for more than their asking price. In July, that number was 50 percent.
Another sign of a little bit less competition? Since January 2020, the number of people who want to get a mortgage has been falling quickly. In the same way, the number of houses under contract, which is sometimes called the number of homes under contract, has been going down lately. Both of these things point to at least a short break in buying.
Robert Heck, vice president of mortgage at the online mortgage marketplace Morty, says that buyers may have less competition in the coming months. “Prices of homes for sale tend to go down in the months before Christmas,” he says.
Today, the market is open.
It takes longer to sell the average house than it did earlier in the year. Realtor.com says that since June, the number of days on the market has been going up steadily and reached 45 days in October. The longer time frame for selling indicates a more specific need and, in some cases, gives people who want to buy a house a chance.
Kerry Melcher, the director of real estate at Opendoor, says, “If you see more “for sale” signs in your area and they don’t disappear overnight, this is a sign that the market for sellers is starting to slow down.” Pay close attention when you see “for sale” signs that have been up for more than a few days without a “sold” sign.
This doesn’t mean that you can’t buy anything, like other signs that the market is cooling. Even though properties have been on the market longer than in the past few months, they are selling more quickly than usual. This month, more homes were sold than in any other recent month.
“From the point of view of the balance between supply and demand, the market is still very active,” said Parker Ross, the chief economist of Arch Capital Service Mortgage Group’s worldwide business. The number of homes that are sold within two weeks is still higher than it was in 2020. This shows that there is still a lot of demand that isn’t being met.
But don’t think there will be a buyer’s market.
The short and long of it is that the market is still very hot, and despite all the good signs, a complete turn around isn’t going to happen any time soon.
Dottie Herman, vice chair of Douglas Elliman Real Estate, says, “The market is starting to settle down, but it’s still an interesting seller’s market.”
Mortgage rates will have a big effect on how likely it is that things will level out in the next few months. Most reports say that changes in Federal Reserve policy will likely cause rates to go up in 2022. MBA Mortgage Banker says that mortgage rates will be 3.3% in the first quarter of 2019 and will go up to 4.4% by the end of the year. Freddie Mac thinks that the interest rate will go down to 3.7% by the end of 2022.
It is a huge jump from the current benchmark mortgage interest rate of 2.98 percent, making it much harder for people to buy.
Larrea says, “Your ability to buy things goes down by 9 to 11 percent for every 1 percent your interest rate goes up.” Someone said, “That’s a big difference in price.”
The point? If you’ve been thinking about buying a house, now might be the best time. Daryl Fairweather, the chief economist at Redfin, says that time is the most important factor.
“I think buyers will feel more comfortable than they did in the spring, but they should be ready to move quickly if they find the right house,” she says.