Whoever said the 2020’s was going to be a better decade probably didn’t have a crystal ball because if they did, they would have seen how… challenging the decade would start off. With millions of people suffering due to COVID, it’s hard to believe that the real estate industry has managed to stay afloat. No, it’s managed to thrive!
The housing market has seen a huge surge in buyer activity over the past year and half and we have to wonder if it’ll change as we head into fall. Well, we have some insight from top-rated real estate agents as to what real estate trends will affect the housing market this Autumn.
Real estate agents have seen a huge surge of buyers entering the market throughout the pandemic and that can be attributed to the incredibly low interest rates. However, that’s likely to change due to the ever-rising asking prices on properties. Why, 54.4% of agents say that their clients are backing out of contracts once the realization sets in that they’re paying an incredible amount of money on a property that may not be worth the steep price tag.
As more of the country gets vaccinated, 32.9% of real estate agents say they are seeing more homeowners take the plunge and put their homes on the market. The fear of contracting COVID is still there, but those who are vaccinated and maintain CDC protocols (wearing masks, disinfecting surfaces, hand washing, etc.) are eager to cash in while the market still favors sellers.
At the end of 2020, 52% of real estate agents said their clients were receiving multiple offers, so much so that the property would be the subject of a bidding war (which also increased housing prices). However, 54% of agents say that the bidding wars have reached their peak and will likely become less of a commonplace as more houses come onto the market.
In the past, buyers who couldn’t find a house that checks off all of their wants and needs would look at new construction homes and customize it to their specifications. That’s not necessarily the case anymore because the cost of materials have increased significantly during the pandemic.
The cost of lumber, for example, has increased 250% and that alone will increase the overall cost of a new construction home by $36,000!
A contributing factor to the rise in buyer activity was the fact that interest rates were some of the lowest we’ve ever seen. Even though the asking price on a house was higher than they’d like, buyers still submitted offers because they could still save a large bit of money over the life of the loan because of those low rates. That may change once the economy improves and the Federal Reserve raises interest rates.
One group of buyers who won’t be affected by this are cash buyers and sellers will almost always choose offers from buyers with cash over financed offers. Cash buyers have a leg up over non-cash buyers because the seller will have cash in their hand at the time of closing. They don’t have to wait around for a buyer to be granted a mortgage nor do they have to worry that a deal will fall through if the mortgage was denied. The future of the real estate market isn’t guaranteed and these predictions can change. If you’re thinking about venturing into the market any time soon, it’s strongly recommended to consult with a realtor beforehand. They’ll be able to give you insight regarding your local market and can go over all of the options available to you.