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With higher home prices, low mortgage rates, and limited home supply, the remainder of 2021 will likely continue to be a seller’s market—possibly even for the foreseeable future.
As you are likely aware, a buyer’s market occurs when the supply for homes exceeds demand. Moreover, in a buyer’s market, real estate prices often decrease, and homes tend to stay on the market for a few days longer. In such a market, sellers will often drop their asking prices to attract prospective buyers and sell their homes sooner. Plus, sellers are also more willing to negotiate under these conditions.
On the other hand, in a seller’s market, demand exceeds supply, which means that typically sellers have the advantage here due to a limited or less than a 6-month supply of homes. Furthermore, in a seller’s market, homes tend to sell faster, home prices often go up, and bidding wars can occur. So why does this matter? Well, if this is your first time shopping for a home or your first brush with a seller’s market, knowing how to navigate such a market is crucial and can very well save you thousands of dollars.
Clearly, 2020 gave rise to a seller’s market for much of the nation. But as we make our way through 2021 and see similar trends, many prospective homebuyers are wondering if the rest of 2021 will continue to be a seller’s market or if a possible shift in the forecast can be expected anytime soon?
The simple answer here is that a seller’s market for the remainder of 2021 is very likely. In fact, at the moment, existing 2021 home sales are up by 9 percent, and newly built home sales are up by 21 percent. Simultaneously, home values are up 8.4 percent, and listing prices rose by 15.4 percent compared to last year—all with 30-year fixed mortgage rates hovering just below 3 percent. Though these numbers are expected to fluctuate, home sales are still projected to grow, and home prices may level off as the economy recovers and mortgage rates eventually increase. However, with more buyers (first-time and millennial homebuyers) and limited home inventory, the rest of 2021 is poised to follow similar patterns.
That said, there is still an expected home inventory surge on the horizon, especially with an increase in residential construction spending. Not only does an increase in home inventory or supply mean buyers will have more negotiating power, but it also means they will have more affordable options.
Though a clear market shift is not expected until the end or after 2021, the good news is that the economy is on the mend, and other industries are bouncing back, making it that much easier for people to afford homes and for new homes to be built. Right now, however, much of the demand is being spurred on by low rates and the current state of things. But as we head into Spring 2021, many analysts expect a slight shift in the market, though, as briefly mentioned, not a complete 180. By 2022, however, a significant shift (from a seller’s to a buyer’s market) may very well be in the forecast.
While low mortgage rates were effective in enticing buyers in 2020, limited home inventory and strong demand definitely had an effect on affordability across the country. Thus, it is highly recommended that buyers shop earlier this year if they want to make the most out of the current mortgage rates.
In general, navigating a seller’s market as a buyer means you need to act fast, be competitive, and have the right assistance in order to close on your dream home. One of the easiest ways then to get the ball rolling in a seller’s market is by getting pre-approved for a loan ahead of time, so your financing is in order when you need it. All in all, house hunting or purchasing a home in a seller’s market does not mean your homeownership dreams are dashed, especially not with mortgage, real estate, and financial experts at your side.
Nevertheless, if you happen to find that you keep losing out on the homes you are interested in (due to a bidding war or for other reasons), try not to get discouraged. Instead, be patient and trust the overall process. Ultimately, buying any piece of real estate is an investment; and in order to choose wisely, stay within your budget, secure the right mortgage, and find the home of your dreams—all during a seller’s market—expert assistance with your home purchase is in your best interest now more than ever.
Are you curious about mortgages, or are you ready to apply for one to buy a home? 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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