As the experts at Fathom Realty will tell you, it’s not just willingness and ability to buy or sell property that governs the housing market. Several other factors act upon aggregate market demand and supply. Once you decide you’re ready to buy or sell your house, you need to assess the market situation holistically to see if the time is right.
COVID-19 and the ensuing economic impact on the nation have frozen the wheels of progress in many industries. Real estate is one of them. As stay-at-home orders have extended indefinitely and businesses have pulled shutters down, the housing market has suffered the most. The slowdown has brought property prices down by a lot, affecting property investors, owners, and sellers alike.
For the housing market to rebound, the coronavirus-induced inactivity has to be replaced with renewed engagement between buyers and sellers. In short, you need to wait for the market to heat up again. If you act prematurely and are quick to sign a deal, property value will most likely suffer, and financial gains will be minimal. Moreover, it could end in unfortunate situations such as pending contracts and slowed down home sales. You don’t want any of that.
That’s why it’s essential to consult with a real estate expert like Phillip Fehler right from the get-go. He has years of experience in the real estate market in Fayetteville, North Carolina, and can help you set up a timeline for property sale or purchase.
He will also remind you of some of the factors that determine whether the housing market is hot or not, as we’ll elaborate below.
New Listings On the Market
It doesn’t matter if you’re out to dispose of real assets and invest in something new. You’re not supposed to find buyers and ignore all other facets of the market. That’s a myopic view of the market that will lead you nowhere (or nowhere profitable). You should be looking at the new property listings on the market to gauge how active the property market is. If there’s a generous supply of new listings, you can tell that the time to list yours is now.
The effects of the pandemic may have reached us late, but they were quick to hit the housing market. Property sellers instinctively retreated, making the supply of property in the housing market scarce. As the supply of property options stifled, the shortage of residential homes for sale increased. Families that were planning to move into a new house were struggling to find a house. College graduates who were supposed to move into their first real apartment and start a job were hunting for one to no avail.
According to a Redfin report, there was a 30% annual drop in property listings as only 70,000 new homes were listed on the housing market. Even as listings increased, the gap between property supply and demand in the housing market was still too wide to bridge. So before you decide to put up an ad, speak to an experienced real estate agent first.
Market Demand for Property
While property listings are scraping the housing market’s rock bottom, property demand is soaring high. Demand was 5.5% higher in the first week of May while the pandemic was raging on compared to pre-COVID times.
It’s crucial to locate the causes of such a sudden rebound in property demand.
As it turns out, unimaginably low mortgage rates were a major force behind this change. With interest rates falling and mortgage becoming easier to pay off, potential property buyers quickly jumped on the bandwagon and began investing in real estate. Even now, as the year is coming to a close, the 15-year refinance rates have remained at 2.125% for 12 consecutive days. This allows home buyers to save on their mortgage payments every month and still pay their way up to own their place.
According to the Mortgage Bankers Association, the mortgage composite index showed that home loan applications increased 0.3% every week toward the end of May.
Time Delays in the Housing Market
Another trend on the rise in the housing market is that property searches don’t always translate into purchases. The National Association of Realtors conducted a survey that revealed that 40% of realtors had dealt with clients who put their home purchase on hold for months. The time-on-the-market rates are increasing, and this is widening the gap between when properties are listed and sold.
This is a cue for property sellers who are hoping to sell their homes immediately or as soon as possible. Even if you’re sure that your property is valued high and will attract buyers in the blink of an eye, don’t bet on it. As mentioned above, the statistics have revealed that home buyers are likely to back out or leave the deal to go stale without a resolution.
Again, it’s important to consult with your real estate agent and see what game plan they suggest.
Asking Prices and Demand
This is another prompt for property sellers. As of now, there’s a rift between the prices that sellers are quoting and what buyers are willing to pay. NAR has reported that 72% of realtors have confirmed that their clients are unwilling to reduce their asking price, even when their property has stayed on the market for a while. The property sellers who have compromised on the price have only lowered it by less than 5%. This hasn’t been encouragement enough for buyers to meet them halfway and seal the deal.
What buyers are seeking is a fall in prices by at least 5-10%. This is a significant loss for the sellers, but it’s also shrinking the affordability gap for most buyers. With available property options being reserved for high-paying buyers, lower-paying ones are entirely sidelined. This will affect living standards in the country and drive the housing market toward a slump.
If you’re concerned about the market and the best time to shoot your chances, talk to our real estate agent, and he’ll guide you at every step of the way.
Phillip Fehler is a real estate broker at Fathom Realty who can make your real estate dreams come to life.
His experience in the real estate industry has granted him expert knowledge of the property market. He offers his real estate brokerage services to hundreds of residential clients in Fayetteville and Fort Bragg in North Carolina.
His clients have always returned with positive reviews for his work ethic, commitment, knowledge, and service quality.