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As we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here is a look at four key components that are shaping this unprecedented market.
There are many headlines out there that claim we are reverting to a more normal real estate market. This would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019, but that is not happening. The market is extremely fluid as demand is still strong while housing supply is slowly returning.
The truth is that we are in the midst of an unprecedented real estate market fluctuation. Home values are appreciating at rates we have not seen since the housing boom, and there is a general shortage of homes for sale across the nation. This has led to widespread bidding wars, as homebuyers struggle to snatch up a home before prices go even higher.
Let’s go over why we are in this rapidly changing market and how it will affect you as a home buyer (and seller).
There are many economic and demographic trends shaping the current real estate market. Knowing what’s going on in the real estate market is extremely valuable if you want to cash in on a current trend or get a head start on a potential one.
These four key trends have been making big waves in the real estate industry. They also have the potential to dramatically impact the real estate market for years to come.
Earlier this year, the number of homes available for sale fell to an all-time low. In recent months, however, inventory levels gradually began to trend up. According to the latest Monthly Housing Market Trends Report from Realtor.com, newly listed homes have grown by 4.3% on a year-over-year basis.
This year, growth in new listings has continued into the late summer season and is predicted to persist well into this fall, which is a welcome sign for a tight housing market; good news for buyers who crave more options.
However, even though we are experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states. That is why it is still a sellers’ market, giving current homeowners immense leverage when deciding to put their house up for sale.
Today’s ongoing low supply coupled with high demand creates a market characterized by high buyer competition and bidding wars. Buyers are going above and beyond to make sure their offer stands out from the crowd by offering over the asking price, all cash, or waiving some contingencies.
The number of offers on the average house for sale broke records this year – and that is great news for sellers. In fact, the latest Confidence Index from the National Association of Realtors (NAR) says the average home for sale receives at least five offers as of June 2021.
For buyers, the best way to put a compelling offer together is by working with a local real estate professional. That agent can act as your trusted advisor on what terms are best for you and what is most appealing to the seller.
The competition among buyers is driving prices up. Over the past year, we have seen home price appreciation rise across the country. According to the most recent Home Price Index (HPI) from CoreLogic, national home prices have increased on a month-over-month basis by 0.7% from July 2021 to August 2021; and they are forecasted to grow on a year-over-year basis by 2.7% from July 2021 to July 2022. T
It is not too surprising that rising home values are a big part of why real estate remains one of the top sought-after investments for Americans. For potential sellers, it also means it is a great time to list your house to maximize the return on your investment.
Yet another key trend affecting the market is the rise in home values and equity. The equity in a home does not just grow when a homeowner pays their mortgage — it also increases as the home’s value appreciates. Due to the jump in price appreciation, homeowners across the country are seeing record-breaking gains in home equity.
This is evident when viewing CoreLogic’s recent reports that indicate that homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion and an average gain of $33,400 per borrower, since the first quarter of 2020.
In addition to these four key trends, other factors play an active role in today’s market. For instance, the reduction in the number of days it takes to sell a home and the continued historical lows when it comes to mortgage rates are definitely heating things up across the country.
In 2019, before the pandemic, the average days a house remained on the market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.
Similarly, looking at the 30-year mortgage rate chronicled by Freddie Mac, the average rates over the past several decades paint a very different picture than what we see today, with average rates under 3.00% in more than a few markets.
Ultimately, if you are thinking about buying or selling, there is no time like the present. Obviously, several trends are shaping the current market, including:
As a result, as we make our way through the rest of 2021, it is clear that the trends mentioned above will likely continue to influence the market well into 2022 and beyond. If you are ready to navigate the current real estate market, do yourself a favor and contact a knowledgeable mortgage professional to see how you can take advantage of the current conditions in order to meet your homeownership goals.
Are you curious about mortgages, or do you want to learn more about the intricacies of today’s housing market and its prevalent trends? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Contact us today with any questions you have about mortgages.
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