Traditionally, fall is a season for both the weather and the housing market to cool. With the beginning of school and the holidays, sellers and buyers are less inclined to uproot their lives and move. Conventional wisdom says summer and spring are the strongest seasons for buying or selling your home. However, current interest rates and the shifts brought about by COVID-19 have changed standard wisdom. The hot housing market may be cooling in fall 2021, real estate analysts state, but not by much.
Home Prices In Fall
The national median of home prices hit an all-time high of $385,000 in the week ending August 14th. Those analyzing the market predict home prices won’t start falling, but will instead see more modest increases. The annual rise in April was 17.2%, but the following year is expected to see prices only rise by 5% or 6%. Economists are estimating buyers cannot keep up with such drastically rising prices and will start withdrawing from the housing market, creating a better equilibrium. Sellers will still be in a good position when it comes to getting their asking prices, but buyers may also see some relief from rapid price increases from month to month.
Fall Supply and Demand
According to the National Association of Realtors, unsold homes rose 3.3% to 1.25 million from May to June this year. This means there’s a small rise in inventory, though inventory is not estimated to bounce back to pre 2020 levels entirely until spring.
Low inventory and slowed new construction have been the bane of buyers eager to make a change. Demand is high but inventory is scarce. The largest buying population, Millenials, are now in a financial position to purchase. The demographic is eager to escape rentals and start building equity, but unable to find the starter homes they’re seeking. To compete in this seller’s market, buyers requiring home loans have been waiving contingencies and doing whatever it takes to win against influxes of all-cash buyers. In the coming season, though, buyers may not need or want to pull out all the stops when it comes to bidding wars. With home prices still rising, tired unsuccessful buyers leaving the market, and the creep up in inventory, the aggressive moves buyers have been making to outbid the competition could decrease.
Mortgage Rates In Fall
Almost every real estate analyst has been saying the same thing about current interest rates: they are at an all-time low. Rates averaged 2.87% for 30-year fixed-rate mortgages in the week ending August 12th, according to Freddie Mac data. However, analysts are predicting 2022 will bring a 0.5% to 1% jump. Buyers who want to take advantage of the savings the current rates bring will be eager to buy in this year, especially with a possible rise looming. These low rates help bring balance to the high prices in this seller’s market, enabling it to still remain attractive to buyers.
No Matter the Housing Market, We Can Help
While we can consider the housing market and make educated guesses, if you’ve decided you’re prepared to buy a home and you feel this is the right season, then the time is right. The Reed Team has seen buyers and sellers through all kinds of markets over the decades. With our experience, we can help you reach your goals no matter the season. If you’re considering buying or selling, reach out to us here or contact us at 949-392-6400. We look forward to working with you.