The real estate market, just like the rest of the world, was drastically impacted during the COVID-19 pandemic. Sellers, wary of bringing a deadly virus into their home, decided to press pause.
Buyers, on the other hand, were quickly incentivized to enter the market due to low mortgage rates and their need for more spacious accommodation.
The result? The market saw very low inventory met with extremely high demand, leaving sellers with an overwhelming advantage in the current housing market.
The real estate industry is ever changing, however, and these conditions may soon be shifting as the economy recovers and vaccine distribution ramps up. Whether you’re thinking of buying or selling in the new year — or you’re just curious — here are the key trends you should keep an eye on.
Bidding Wars Are Starting to Slow Down
According to Home Light’s End of Year 2021 Report, the majority of real estate agents (62%) claimed bidding wars are on the decline in their market, up from 3% the previous quarter.
In early 2021, agents reported more than 20 bids per home, while now agents claim each listing receives about 5 or so bids. Clearly, the market is still very competitive for buyers, however, the current market conditions seems to be leveling out just a bit so that buyers have a fairer chance than they did just a few months ago.
Buyers still heavily outnumber sellers in the market, so what’s the reason for the decline in bidding wars? Most realtors claim this is mostly due to buyer exhaustion.
After years competing in an overly intense seller’s market, buyers are not opting to sit on the sidelines and wait for the market to level out.
Coincidentally, the market may indeed prove much more favorable to buyers in the coming months. Inventory is still low, which means sellers still have the advantage, however, sellers, incentivized by vaccine distribution and high home prices, are starting to rejoin the market.
Home Prices are Still Rising
In the current market, home prices are well-above average, and the majority of real estate agents (53%) claim prices are still on the rise. This percentage is extremely low, however, when compared to last quarter when 95% of real estate agents affirmed home prices were on the rise in their respective markets.
Moreover, about 50% of agents claim price reductions are becoming more and more common. While this could be due to sellers overpricing their home from the get-go, these reductions could also mean the market is slowly beginning to level out.
Another sign the market may soon become less competitive for buyers is the rise of sellers entering the market. Now that sellers have caught on to the high home prices, they’re excitedly entering the market.
While we shouldn’t expect to see drastic changes happening overnight, this trend may lead to home prices lowering in the near future.
Remember, demand is still high and buyers still outnumber sellers, so this is still a great time to contact a real estate agent about selling your home.
New Wave of Homebuying May Surge Due to Pandemic Savings
While there are signs sellers may be entering the market to match demand, a new wave of buyers may soon be approaching.
As noted, buyers, too tired or too financially savvy to compete under the current housing market conditions, may be pressing pause on their endeavors. However, a new wave of buyers may also be approaching.
During the height of the pandemic, while some were met with financial hardships, others were able to save. Instead of attending concerts, drinking at bars, traveling around the world, or keeping up with the current fashion trends, potential buyers around the country were able to save up.
Buyers are still highly incentivized to enter the market. While the environment is competitive, low mortgage rates actually make the homebuying process much more affordable than normal, so we may soon be seeing this new wave of buyers, who’ve spent the last year saving up, enter the market soon.
