The real estate market has been bananas over the past year. Real estate agents from every corner of this country have been keeping busy! There’s been a massive influx of buyers entering the market, and the agents have been keeping track of the current trends, and they have a few predictions that will shape the fall 2021 market. Here’s a look at the top five predictions realtors have for the housing market in the near future.
1. Buyers worry about rising housing prices
Over the past year and a half, housing prices have skyrocketed and buyers didn’t hesitate to submit offers at or above asking. However, prices have increased so much that 54.4% of realtors say their clients are starting to back out of contracts because they’re realizing how much money they are actually spending. These situations are most common in the Northeaster and Mountain regions, but it’s also happening in rural neighborhoods with fewer than 100,000 residents.
Note: If you’re worried about spending too much on a home, you can use a home affordability calculator to get a better idea of how far your money will go.
2. More sellers enter the market as health concerns decrease
As of writing this article, 53% of Americans have been fully vaccinated, and as more people receive the vaccine, 32.9% of realtors say that they’re seeing more sellers enter the market. Sellers aren’t so afraid of contracting COVID and are eager to list their homes so they can take advantage of the booming seller’s market. This is all fantastic news for buyers because as more houses come onto the market, the easier it may be to buy the home of your dreams.
3. Bidding wars reach a fever pitch
If you were to look at the last quarter of 2020, 52% of surveyed realtors said bidding wars were commonplace in their market – even people who were selling a house as-is would receive multiple offers! Yet, during the second quarter of 2021, 54% of agents said they were still seeing a lot of bidding wars, but they don’t see this continuing into the second half of the year.
Agents report that properties aren’t receiving as many offers now because more houses are coming onto the market. With that said, a seller may be more willing to negotiate with a buyer because they aren’t getting as many offers.
4. Price volatility hinders new construction homes
If you can’t find a house that meets all of your needs, you could always consider building a home from scratch. You could contact a contractor, go over the specs, plop some money down, and in a matter of a few months (or a year), you could be moving into that perfect house.
Sounds great, doesn’t it? Well… In today’s economy, it’s going to be more expensive than it was a few years ago. The pandemic has caused the price of a lot of things to increase and it’s that volatility that makes building new homes less appealing. Why, between April 2020 and April 2021, the average cost of lumber has increased by 250% per thousand board feet, going from $350 up to $1,200 per thousand board feet.
5. Cash buyers reign supreme
Being that housing prices have increased so much, buyers were willing to pay because they were able to secure a low-interest loan. Unfortunately, not only are buyers being priced out of the real estate market, but they’re also up against cash buyers. A cash buyer is more likely to win the bid because the seller doesn’t have to worry about financing falling through – the buyer has the cash on hand.
The 2021 housing market is ever-changing
Experienced buyers and sellers who are reentering the housing market are going to have a whole new experience. Inventory will replenish itself as the vaccine continues to get administered, which should help lower prices. The option of building a brand new home may or may not be on the table for them if the cost of things doesn’t go back down. As confusing and stressful as the future of the housing market may seem, don’t get discouraged! Buying or selling a house is an exciting life event – you just need to find a top-rated realtor to help you navigate the choppy waters.