After more than a year of buyer frenzy in the real estate market where staggering increases in home prices and multiple offers on almost every home was the norm, the market appears to have crested nationally.
There are signs, even here in our market, of homes taking a little longer to sell and even price reductions happening, which was almost unheard of in the past 18 months.
For many frustrated buyers this market correction could mean the opportunity they have been waiting for to finally win the bid without the crazy bidding wars and having to remove contingencies to make their offer more attractive.
This does not mean however that we will be seeing drastic price reductions or a downturn in the market making for more affordable housing. From all indications home prices are still increasing, but considerably less than they were a few months ago. According to the latest Federal Housing Finance Agency numbers, as of August home prices had jumped an unimaginable 18.5% from the same month in 2020. However, predictions moving forward reflect normal market appreciation of 2% to 5%.
Nationally, median home list prices have held steady over the past four months also, staying around $380,000 after peaking at $385,000 in June, according to the most recent Realtor.com data. The number of homes with price reductions has more than doubled since February.
The number of days on the market before a home sells has also steadily been rising since June, increasing from a low of 37 days to 45 in October.
Rising mortgage interest rates are also likely helping to keep price growth in check as homebuyers have only so much money they can spend on housing each month. Rates have been trending upward from the historic 2.65% for 30-year fixed-rate loans last January.
Unfortunately for cash-strapped buyers home prices are not expected to return to pre-pandemic levels. The reason is, there simply are not enough homes to go around. That’s the reverse of what happened leading up to the housing bubble popping in the 2000s.
Back then, there were more homes for sale than buyers. It was also easier for just about anyone to get a mortgage. These days, the opposite is true. The nation is suffering from a severe housing shortage at a time when more Americans are hitting prime homebuying years.
One other area of the market to keep an eye on is foreclosures. Foreclosures during the pandemic were almost nonexistent for about 18 months due to the nationwide foreclosure ban. This moratorium expired in July and we expect at some point in the new year to unfortunately begin to see increases of foreclosed properties come on the market.
All indications suggest the 2022 housing market should be a little closer to normal with more opportunities for buyers and stable pricing with moderate appreciation for Sellers.
Wishing all a wonderful and joyous holiday season and a New Year filled with love, health, and happiness.