Last March, the COVID-19 pandemic first turned many things upside down, and one of those things was the housing market. The market became influenced by stay-at-home orders, financial uncertainties, and new flexibilities with remote work. Now, almost a year and a half later, the market is still being affected.
Whether you jumped on the home buying or selling train, or are still considering it, read on to learn three of the ways that the ongoing pandemic has affected the real estate market, and the trends we expect to see with each as this year closes out.
Current trend: Decrease in housing inventory
The housing market has been referred to as a seller’s market for a reason. That’s because when the pandemic began, the number of homes for sale decreased. This was due to many things, Realtor.com noting that one of these being that those prospective sellers were hesitant to put their homes on the market to prevent the risk of contracting COVID-19. With fewer homes for sale but eager buyers remaining, sellers have had control and power with their listing prices.
What we expect: Increase in housing inventory
While the housing market will remain competitive, those sellers who were reluctant to list before will be more ready to list. According to Forbes, new listings are already up 36% from where they were this time last year, and the total active inventory showed a smaller decline for the first time since last November. Realtor.com elaborates on this citing that there were 2.6 months of housing inventory for sale this past June, which is a significant step up from where it was back in January. More homes are expected to continue going up for sale during the second half of the year.
Current trend: Higher mortgage rates for buyers
Due to the seller’s market, if you were a prospective buyer, chances were that you were hit with a higher mortgage rate. CNBC notes that in June, mortgage rates spiked to about a quarter of a percentage point during the month. This increase in mortgage rates is, unfortunately, a trend that prospective buyers have become accustomed to.
What we expect: Lower mortgage rates for buyers
With the delta variant, mortgage rates have already begun to drop, dropping to an all-time average low of 2.87% for a 30-year fixed-rate loan this past August. One reason for this is that investors often take their money out of the stock market when they get worried about the economy, and instead put it towards mortgage bonds, which is a safer investment. With lower rates, buyers become more financially able to afford a home. The one downside to this is that lower rates can drive more buyers, which can lead to a continued competitive market.
Current trend: Increase in home prices
Back in April 2020, the median home sale price in the US increased 4.7% compared to the year prior, according to Redfin. The pandemic has caused 35 consecutive weeks of double-digit price growth due to the increased demand and low supply, and this steady increase has become a trend that prospective buyers are used to.
What we expect: Home prices may still increase but will increase more slowly
While prices are still increasing, they are increasing at a much slower rate year over year. Back in August, while there was an all-time national high of $385,000 for the median home listing price, this was significantly less than what the annual rise previously had been. As the end of the year approaches, analysts believe that the percentage increase in listing prices will be much more modest.
Whether you’re looking for a new home or looking to sell your property, Lantern Real Estate Group can work with you. Our team is always up to date on the current market trends and will help you navigate your home buying, or home selling, journey.
Visit Lantern Real Estate Group to chat with us today!