The process of buying a home can be difficult to navigate, and today’s market has made it especially difficult for buyers. With interest rates at record highs over the past year, there has been a surge in demand. But combined with the low supply of housing throughout the coronavirus pandemic, this demand has created a housing boom.
If you are getting ready to buy or sell a home soon, it’s important to know what to expect. So we’re sharing some housing market trends and summer housing market forecasts that you can expect to see this year.
And if you are starting the home buying process, visit Credible to compare rates and lenders and explore your mortgage options.
Mortgage rates are rising, but they will remain relatively low
One of the most significant impacts of the economic recovery from the pandemic on the housing market is low interest rates. In March 2020, the Fed cut interest rates, pushing mortgage rates to their lowest levels ever. They have remained at historically low levels throughout the past year.
That being said, mortgage rates are on the rise. And while the increase may be relatively small, it can still mean the difference of tens of thousands of dollars in interest over your loan.
While current low mortgage rates are rising slightly now, this is not the first time this has happened in the past year. Therefore, it is unclear whether this trend will continue. That being said, rates are still low compared to pre-pandemic levels.
To see what rates you may be entitled to, visit Credible to compare lenders and mortgage rates.
AS MORTGAGE RATES INCREASE, WILL THE REAL ESTATE MARKET REFRESH?
Demand is still high, pushing home prices even higher
The high demand from home buyers and the limited inventory of homes on the market created a perfect storm for price increases. Home values in the United States have risen, Zillow says 11.6% over the past year and are expected to increase by about the same over the summer months and the coming year.
Unfortunately, home appraisals haven’t fully kept up with the high demand, which means that some homes don’t appraise as much as the agreed purchase price. For example, if you are offering $ 300,000 for a house, but it is only valued at $ 280,000, you might be forced to pay the $ 20,000 gap out of pocket – and that’s on top of your down payment. .
WITH HIGH HOUSE VALUES, THIS IS HOW OWNERS CAN
Buyers can expect to participate in auction wars due to limited inventory
Another result of strong housing demand and limited inventory has been a drastic increase in the number of auctions for each home. Today, it’s not uncommon for a home seller to receive dozens of offers within days of putting their home on the market. As a result, bidding wars ensued.
These bidding wars have been great for sellers, but not so good for buyers. Not only is there more uncertainty about whether an offer will be accepted, but buyers have to make more concessions.
Homebuyers are offering a lot more money as consumer confidence wanes, make large down payment deposits, and even forgo appraisal and inspection contingencies.
It’s important to start the buying process knowing how much you can actually afford and take note of this trend of price growth. Visit an online mortgage broker like Credible to see what mortgage size you might be pre-approved for.
The home buying process may take longer than usual
Several factors came together and made the mortgage closing process slower than usual. First, the surge in demand has simply created more work for mortgage lenders.
Many lenders have also increased their lending standards due to the financial difficulties that many face. In order to ensure that only truly qualified buyers get loans, lenders have become more stringent about their income, employment, and credit requirements. As a result, it may take longer to process each loan.
HOW TO BUY A HOME IN 2021: 8 TIPS TO WIN THE COVID HOME BUYING SEASON
Housing transactions will increase with increased vaccine deployment
As the coronavirus vaccine continues to roll out, much of people’s lives are returning to some semblance of normal. The mortgage industry is no exception. Many homeowners have hesitated to sell their homes over the past year due to uncertainty.
This summer we are probably expecting more real estate listings. This could be good news for buyers, as an increase in inventory can help level the playing field a bit.
The bottom line
The housing market – for both buyers and sellers – has evolved rapidly over the past year due to low interest rates, high demand and low housing stock. When we look at the summer real estate market, we’ll likely see some of these trends continuing, such as increased demand. But we can also see some trends reversing, as interest rates start to rise and vaccine rollouts increase stocks.
These market forecasts will likely be viewed as the country’s economic growth following the COVID-19 pandemic, whether you live in San Francisco or San Diego, San Antonio or Los Angeles, or Las Vegas.
If you think it’s a good time to buy a home, now is the time to start preparing. Visit Credible to connect with experienced loan officers and get your mortgage questions answered.
Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.