July 2021 real estate market update • Benzinga

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The past year has been a whirlwind for the real estate market. Home prices have skyrocketed with values ​​up 22.4% year-on-year. Suburban cities are seeing increased home sales and population growth due to the COVID-19 pandemic. Finding a new home with living space, outdoor space, and even room for a home office and gym has become what buyers are looking for, and they are willing to pay the higher prices for it.

With lower interest rates, more buyers than ever are competing for their dream home or even a renovation. The real estate markets in many cities see offers above asking price with little or no contingencies as well as multiple offers on each home. The housing market is still hot and endless.

Current real estate market conditions

It is a sellers market. The sellers can basically name their price and their terms – and get what they want. An influx of buyers are ready and willing to buy now. The demand for real estate is high and the supply is extremely low. Most housing markets across the country simply do not have enough inventory to meet the demand of home buyers. Nationwide housing supply is the lowest in recent years with only 1.1 months of supply. In general, stocks have been closer to a 3-4 month supply over the past 5 years. Today, with such high housing demand and record interest rates, house prices are rising and market conditions are extremely competitive.

What is impacting the housing market?

Many factors have a direct impact on the housing market. Previously, the time of year and location had the biggest effects. While these are still major factors, we are now in a whole different ball game.

  • Low interest rates give buyers a higher spending budget. They can afford a lot more homes and stretch their money further now with lower interest rates. The uncertainty of when rates will rise again is causing buyers to panic and buy now.
  • Rising house prices are causing people wishing to downsize to cash in on their current homes and buy something more modest. The same goes for people with a second home or a second home. Now is the time for them to sell and make good profits on their investments.
  • The above-asking bids have also increased the value of neighboring homes, which will be valued higher if comparable homes on the same street have recently sold for better prices and above the list price.
  • Supply is an important factor in the housing market. With the housing supply so low, competition is fierce and is pushing up house prices. As many people try to move into the suburbs and out of the big cities, markets that have never had such demand see houses disappear from the market within days.

The housing market is currently at a high level. The median price of a single-family home has climbed to $ 371,000. This is an increase of $ 143,000 nationally since 2016. Home prices continue their upward trend, having increased 22.4% in the past year. This impressive price growth worries some investors and buyers about a correction in house prices in the years to come.

The rental market has also followed an upward trend, with rental rates rising 3% last year. Average rental prices have increased by almost $ 300 per month over the past 5 years. While some buyers are taking a break from the competitive real estate market when stocks are low, many are turning to leasing to wait for this extreme market to end. The national rental vacancy rate is low at just 6.8%. This is good news for investors looking to buy rental properties as rental rates are still on the rise and vacancy rates are low. For renters however, it can be difficult to afford higher rental rates. With a tight rental market, there is an increased need for affordable housing and rental properties.

As construction costs continue to rise, construction jobs are also on an upward trend. Builder sentiment is high due to the housing shortage. New residential construction has created more housing and more investment opportunities. However, with construction costs at an all time high and many materials run out or out of stock, construction is slower than expected. Items such as appliances, windows and doors are simply harder to find as production has fallen and demand has increased. Buyers who have difficulty buying have decided to stay in their current home and renovate it as demand for new homes has been demanded in many cities.

A plethora of home improvement shows inspired many people to repair and remodel homes which in turn boosted foreclosure sales and caused the number of distressed properties on the market to hit a rock bottom. all-time low of just 0.3%.

Buyers and investors have tried their luck by purchasing foreclosure properties to renovate or reverse. This is ideal for neighboring homes as there are fewer distressed and abandoned homes in the foreclosure process, which helps increase property values.

Economic data

The COVID-19 pandemic in 2020 has caused unemployment rates to rise sharply. The nationwide average unemployment rate has risen to nearly 15%, from 3.5% before the pandemic. Now the rate has dropped to 6.1% and is still on a downtrend. Job growth and employment rates are on the rise as businesses have started to open at full capacity and the economy begins to recover. Statistics show the country is still not where it needs to be when it comes to a successful comeback, but projections are optimistic that it will.

Mortgage rates

While mortgage rates tend to fluctuate daily, they have remained low (around 2.6% to 3%) over the past year. This is why buyers are taking advantage of the current real estate market and borrowing more than they ever have, because with lower mortgage rates their loan officers can lend them more money. Homebuyers can then buy more expensive homes, which contributes to the growth of our current real estate market. When buyers research the best rates, they learn that things like credit scores, loan term, types of interest rates, and even down payments affect their interest rates and monthly payments. Higher credit scores, shorter loan repayments, a fixed rate mortgage, and a large down payment can cause you to see a lower interest rate.

Current real estate market outlook

While it is still difficult to successfully determine the real estate market outlook for 2022, many states across the country are still not seeing a slowdown in home sales. The market was now expected to return to normal, but with much of the population growth moving to the suburbs and interest rates still low, there is no end in sight. The value of single family homes is expected to level out a bit as the herd of buyers decreases. Buyers, real estate investors and real estate agents will continue to monitor mortgage rates for further determination next year in real estate.

Updates from the local real estate market


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