The last year has been a record-breaking one for real estate markets across the country. Low mortgage rates, limited inventory, and high demand have resulted in a real estate market boom and high home prices, but Has the Housing Market Peaked?
That said, as of August 2021, there are indications that prices have peaked, buyer demand is softening, and markets are slowing down some. While the next year is still likely to be a seller’s market, here are some of the reasons experts believe that the market has peaked and that there will be increased opportunities for investors in the months ahead.
Home Prices Are Rising at a Slower Rat
According to Realtor.com data, in June the national median for home prices for active listings was $388,000, which was up 12.7% from the previous year. However, in May they were up 15.2%, and in April home prices were up 17.2% from the previous year.
This trend shows a slow but gradual decline in the rate that home prices are rising, an indication that markets are softening. In addition, sales volume, mortgage applications, and home prices have all trended downward in the last couple of months. Based on this data,Redfin Chief Economist Daryl Fairweathe believes that,” in June we entered into a new phase of the housing market.”
Fairweather believes that “one of the reasons for this is that prices have increased beyond what many buyers can afford.” Experts speculate that buyers have finally become fed up with the record-high home prices across the country and have decided that, despite low mortgage rates, now is not a good time to buy. This collective inaction by buyers is helping to cool off real estate markets around the country, resulting in home prices rising at a slower rate than in previous months.
Inventory is Increasin
In response to these trends, many homeowners are deciding that it’s time to sell. They’re basically looking at the overall situation and deciding that they won’t get a higher price than they can get right now. In June, new listings were up 10.9% compared to May and were up 5.5% for the year.
Ian Shepherdso, chief economist at Pantheon Macroeconomics, predicts that inventory will continue to rise and that “sales will fall a bit further over the next few months, pushing up the months’ supply numbers and taking some of the heat from the surge in prices.”
What Investors Should Focus on in Coming Month
While it seems that prices have peaked and that real estate markets will steadily cool down in the third quarter of 2021, it continues to be a seller’s market due to low mortgage rates and high demand. Nevertheless, investors looking for opportunities should keep a few key factors in mind:
- Federal protections leading to a national foreclosure moratorium expired on August 1, 2021. While it will take some time for lenders to go through the foreclosure process, investors should be looking for distressed properties to hit the market in the next few months
- As of August 7, 2021,Realtor.com dat showed a rise in listings for 17 out of the previous 20 weeks. Inventory is steadily increasing, which will lead to more opportunities.
- Many owner-occupant buyers have backed off, deciding that now is not a good time to buy due to high prices resulting in less competition for investors
- Mortgage rates continue to be at historic lows. As of August 5, 2021, the average rate for a 30-year fixed mortgage loan was 2.77%. This means that the current market offers an opportunity for fewer financing costs and increased profits for inventors
We’ve Got All the Tools to Support You
The fall and winter of 2021 could present good opportunities for investors in many markets across the country. And when you find the right opportunity, we’ve got all the tools you need to get the most out of your rental property.
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