Mortgage rates increased slightly this summer, yet the price of homes seemed to continue rising in response to the high demand for homes. However, according to an article published by Yahoo! Finance, the housing boom may be winding down. Sales of new home fell 6.6% from May to June and the median home price only rose 6%, a stark drop from May’s gains reportedly in the 15-20% range.
In the article, reporter Georgia Tzanetos offers some possible reasons for the dip in demand and possible outcomes. The article indicates “Chief Investment Officer at the Bleakley Advisory Group Peter Boockvar told CNBC that ‘the moderation in home sales is likely a combination of sticker shock and the slowdown in the ability of builders to finish homes because of a variety of delays.’”
The next several months will reveal the cause behind the slowing of demand and price increases. If buyers are hesitant to purchase a home right now, it may be due to the “sticker shock” of rising home prices. These buyers may begin to search for homes again and even make a purchase if they see home prices decrease in the next few months. However, the lag in demand may be caused because, simply, “everyone who needed a home bought one…”, which would likely result in prices to continue to fall. As the remainder of the summer market plays out, real estate professionals will be watching closely anticipating what’s next for the real estate market.
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The last several months, real estate in the United States has been red hot. Low supply of homes, mortgage rates that continue to remain low and a large number of Americans making post-pandemic decisions to move to bigger homes or homes in different geographic areas have all held pave the way for a hot sellers’ market. However, many know that this is not the first time the real estate market exploded into situations of multiple offers, above asking price, with real estate professionals just trying to keep up. So, it should be no surprise to many seasoned real estate professionals, that there will be a change in the market at some point.
In an article published by Forbes, a theory about the real estate market phases is detailed. Real Estate expert Glenn R. Mueller, PhD believes the four phases of the real estate market are Recovery, Expansion, Hyper Supply and Recession. And, according to Sam Mehrbod PhD, author of the Forbes article, U.S. real estate markets are currently in phase two. This phase is still a sellers’ market, but heading toward the peak. On the horizon, potentially, is the third phase. This phase is a buyers’ market defined as Hyper Supply and buyers become a little more scarce and panic selling can begin.
Mehrbod has suggestions for real estate professionals to help them prepare for the next phase, building a net work to ensure success in any phase of the real estate market. Its imperative for real estate professionals to continue to build and stay relevant within their networks. He makes suggestions such as regularly posting relevant and educational content on social media, beginning to build buyer lead lists for future markets, and utilizing marketing funds consistently to allow long term marketing plans. By staying on top of networking and marketing and anticipating what might be coming up next, real estate professionals can be prepared to ride the next wave.
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The COVID-19 pandemic had a significant impact on the real estate market. As many employees were required to work from home and more Americans found themselves at home many more hours of the day, they decided it was time to make a move. Perhaps to a house with more space for a home office and more space for the all the family members spending more time at home to spread out. As a result, demand increased yet supply could not keep up. Naturally, in turn, home prices increased as well.
As Americans feel a slight return to life before the pandemic, the question is, do they still feel that it is a good time to buy a home. Are Americans leery about the market taking a downturn and perhaps adjust itself? An article published by Realtor.com indicates that Americans remain optimistic about the upward trend of home prices. “Gallup’s survey found that 71% of Americans believe that home prices are going to increase over the next year in their local market” writes reporter Jacob Passy.
Further, more than half of Americans surveyed by this Gallup poll indicate that now is still a good time to buy a home, 53% to be exact. Only 50% of Americans felt this way last year at this time. Despite reports that home ownership is still viewed as a preferred long term investment, Google has found a significant increase in internet searches revolving around the possibility of a real estate crash. Indicating U.S. homeowners or potential homeowners are still keeping an eye out for a change in the real estate market.
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