It’s still a seller’s market out there, ladies and gents, but it may not be that way for too much longer. In HomeLight’s year-end report, real estate experts predict the market is going to cool considerably throughout the remainder of the year.
What’s causing this potential cooling? Let’s take a look.
Throughout the past year and a half, bidding wars have had a starring role in many real estate transactions. However, despite 76% of respondents saying they are still seeing bidding wars on some properties, they go on to say that there are fewer bids per property. Buyers have reached the point where they’ll sit things out for now and wait until things cool.
The reason the bidding wars were so prevalent over the years is that inventory couldn’t keep up with demand. That seems to be changing, even if slightly, as sellers begin to feel more confident about the public health crisis and the risk of infection.
During the first six months of 2021, 95% of realtors said the housing prices have skyrocketed, but now? That percentage has declined. Now, 50% of realtors say that price reductions are becoming more common. This is concerning for sellers because they’re starting to worry that they won’t get their desired sales price if they wait to list any later.
The increased home prices has caused a large disconnect between the actual value of a property and what’s wrotten on the sales contract. Now that the market is starting to stabilize, realtors are experiencing more buyers insist on appraisals and home inspections. Buyers aren’t so willing to chomp at the bit without the contingencies that ensures the home’s condition warrants the high price.
The pandemic has stymied a lot of how we spent our money and real estate experts predict that the next round of buyers are going to have a quite a bit of cash on hand. 46% of agents believe that new buyers will use whatever money they were able to save throughout the pandemic thanks to simplified living and use that toward a down payment while mortgage rates are still low.
Even though new buyers may have squirreled away money that they couldn’t spend on vacations and the like, 45% of agents believe that buyers will seek financial help from relatives and generational wealth to help buy a house. But with that said, the stock market flourished during this time and 37% of agents are seeing buyers liquidate their stock market gains to put toward homeownership.
Forclosure moratorium may have ended in July 2021, but we have yet to see the impact of the impending foreclosure crisis. 9% of agents are seeing an influx of pre-foreclosures but experts predict that the market will see a few shocks along the way, but nothing as devastating as the ‘08 housing crash.
We can’t say with 100% certainty about 2022’s housing market, because there are so many variables at play. Prices are expected to come down, especially once the wave of foreclosures begin. Plus when you take into consideration that seller’s are already showing signs of concern about the already decreasing buyer activity and how much people are willing to pay… Buyers may come out ahead in 2022. We’ll just have to wait and see, though.