Spring has arrived, and many are wondering what it will bring for the housing market. Up to this point, and in the face of the ongoing pandemic, sellers continue to sit on the sidelines. Thus, the plummeting interest rates that brought a surge of buyers resulted in the shortage of housing inventory that we are experiencing right now. In recent conversations, our buyers say they don’t want to miss out on low-interest rates that are already starting to click up but are frustrated with the level of competition for the limited inventory. So, where are the sellers? Well, what they have to say makes sense too. First, how many strangers do they want inside their homes during this deadly pandemic? And if they do sell, they too are then faced with limited options when it comes to finding their next home.
As realtors, it has been an exciting yet often frustrating past 12 months in our business. Gone for now are the days of being able to showcase a seller’s home with an open house. At the same time, buyers are not only limited by low inventory but in their flexibility of how they will better define their wants and needs. We, of course, are always excited to have the opportunity to help a home buyer preview a home in person, but we do understand that frustration.
But hope prevails.
It was just a little over a year ago that a promising spring real estate season ground to a halt. But as uncertain as we all were with what we were dealing with then, this spring may be able to say, “hold my beer.” Here’s what a few industry experts have to say about the housing market and how it will bloom this season.
“Despite early weakness, we expect to see new listings grow in March and April as they traditionally do heading into spring, and last year’s extraordinarily low new listings comparison point will mean year over year gains. One other potential bright spot for would-be homebuyers, new construction, which has risen at a year over year pace of 20% or more for the last few months, will provide additional for-sale inventory relief.”
If this holds, we can expect a less chaotic market as the inventory pressure begins to loosen up. This past year has been an exceptionally frustrating time for homebuyers.
“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”
Safety has been a primary concern for sellers. Even with current safety measures in place, there is a lot at stake for sellers who allow strangers inside their homes. Increasing vaccine distribution should at least reduce that concern.
“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points… However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”
Thirty basis points may sound alarming, but it needs perspective. A basis point equals .01 or one-hundredth of a percentage point. With coming increases expected to be more “muted,” coupled with the progress with COVID, we should be able to expect a strong spring season.
“As the housing market heads into the spring homebuying season, the ongoing supply and demand imbalance all but assures more house price growth…Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”
We’ve heard people voice concerns about escalating home prices. Maybe the most critical thing to remember here is that what happened in 2008 was a banking crisis, not a real estate crisis. Home values took a huge hit then because of malpractice in Wall Street that impacted Real Estate.
We Can Help if You Can Call!
It is encouraging to see that the experts are optimistic about the housing market right now. If you pressed pause on your real estate plans over the winter, we would love to talk to you about how you can re-engage in the home selling or home buying process this spring. We’re hoping and expecting an exciting but much less chaotic time in the months to come.