For more than a year now, the housing market has been in a difficult situation due to the obvious lack of inventory… At the same time low mortgage rates sparked a surge in consumer demand so much that house prices hit an all-time high this year.
This is, of course, great for sellers. But for buyers, it was a difficult journey. Many buyers find themselves out of reach of areas that are usually within their reach, and until housing inventory improves substantially, property values are likely to remain overpriced.
The good news is that there are finally signs that stocks are starting to rise. The bad news is that the market still has a way to go before house prices are likely to drop significantly.
Start your path to financial success with a bang
Get free access to select products we use to help us meet our financial goals. These fully proven options can be the solution to help boost your credit score, invest more profitably, create an emergency fund, and more.
By submitting your email address, you agree that we will send you monetary tips along with products and services that we believe may be of interest to you. You can unsubscribe at any time. Please read our Privacy statement as well as Terms and Conditions…
Inventory returns slowly but surely
Over the four-week period ending July 4, the number of new homes on sale rose 4% from the same period a year earlier, according to Redfin. And new listings are up 3% as well, compared to the same period in 2019. This is the first time a new supply has surpassed pre-pandemic levels.
But let’s be clear – the listing shortage is still very important. In fact, the number of active real estate listings has decreased by 32% compared to last year. And while listings are up 8% now from the 2021 low in early March, buyers tend to continue to run into trouble trying to navigate this very narrow market.
Not only are the houses listed at higher prices, but also bidding war increase these prices even more. In June, 55% of homes were sold at higher asking prices, up from 27% a year earlier.
Should you buy a home today?
If you’ve been struggling to find an affordable home in today’s market, you might consider pause your search. In recent weeks, the number of real estate listings has increased. If this trend continues and more homes enter the market, it may be enough to dampen competition to the point where prices begin to decline to pre-pandemic levels, when they were more affordable.
However, the only argument in favor of buying now is that mortgage rates are still extremely competitive. Some buyers fear that if they wait too long to buy a home, they will lose the opportunity to get the financing available.
But in reality, mortgage rates are unlikely to rise anytime soon, and there is a high probability that they stay low until the end of 2022… This does not mean that they will not grow slightly from where they sit today, but even so, they will still be considered affordable rates on a historical basis.
So, don’t let your fear of losing out at today’s mortgage rates push you to buy a home in the current market if that’s what you are struggling with. Stretching your budget and overpaying your home can run you short of money for years to come as you struggle with the costs of a new home ownership. This, in turn, can put you at risk of losing your home.
There is nothing wrong with continuing to view ads, but you can do it casually and not give all your energy to your home. If your inventory grows, it will be much easier for you to find a home later this year.