If you’re a potential buyer, then there’s no doubt you’ve been keeping an eye on the housing market’s daunting home prices. While home prices were already high before the pandemic, the burst of buyer demand sparked by COVID-19 caused these already high prices to skyrocket.
Many buyers are still surging to the market, encouraged by low mortgage rates and the need for more space. However, some are hopeful that, as our economy heals from the pandemic, these astronomical prices may have finally hit their peak.
Current housing conditions favor the seller
Thanks to increasing incentives for buyers to enter the market matched with seller hesitance — stemming from fear of bringing a deadly virus in their family home — the housing market was left with extremely high demand and extremely low inventory.
The result? Home prices surged and bidding wars skyrocketed. According to HomeLight’s Summer / Fall Report, 95% of real estate agents claim home prices are still on the rise.
This trend won’t change quickly. Over the next 6 months, the majority of real estate agents (67%) expect home values to continue to rise. However, there are some current trends that may indicate lower home prices coming in our future.
Bidding wars have slowed
Since demand was so high and inventory so low, real estate agents reported approximately 20-plus bids per listing, which has created an uber competitive environment in the housing market. Recently, however, realtors have only reported about 5-plus bids per listing, indicating that bidding wars have reached their peak.
While prices are still high, real estate agents have also reported many sellers dropping the price of their home, though this is mostly from sellers who overpriced their home from the get-go.
Clearly, buyers are starting to put their foot down. Though low mortgage rates are driving them to the market, they’re no longer willing to pay ridiculously high prices for their future home.
Inventory may increase as sellers are no longer held back by fear of COVID-19
What’s the main reason for the drastic spike in home prices? Lack of supply.
Especially toward the beginning of the pandemic, sellers were extremely cautious of bringing a deadly virus into their home. Remember, selling can sometimes require a lot of foot traffic in and out your home — though a top-notch real estate agent should offer plenty of virtual tools to make the process safer. Since sellers are normally still living in their home during the sale process, inviting potential buyers inside means exposing their loved ones to the COVID-19 virus.
This concern is completely valid, yet, since the distribution of the vaccine ramped up across the country, real estate agents have seen more and more sellers entering back into the market. Now that the vaccine is available to all those who want it, sellers feel much more secure in this decision.
As more sellers join the market and inventory rises, home prices may start to drop — just don’t expect to see this happen immediately!