Are you currently wondering what is going on in today’s real estate market? Well, here’s a little snippet of what’s happening in the month of October.
Calculated risk concludes that the annual growth rate of 19.7% is probably close to a peak. And that the year-over-year price increases will slow down as the year continues. Now, closings are set to decline roughly 10% in the second half of 2021, and home price appreciation is on the cusp of flipping to a decelerating trend. Again, there will be an appreciation trend, just in a slower, more moderate pace performance rate, compared to what we have seen in the previous months.
Now, that being said, prices are not necessarily declining. They are just appreciating slower, and forecasted to appreciate 32% in the next five years. Buying now before prices continue to exceed expectation is so important.
Now, when we forecast the fourth quarter of the market with this pandemic being in place, Fall is usually the start of the slower season, but we all know this has not been a normal year due to the circumstances. Potential buyers are seeing a slight rise in inventory while mortgage applications jumped over 7%, which is the highest level we have seen since April.
Now it may seem like things are slowing down, but this is only because the last two years have not been normal. However, 2019 was the last normal year and we are already doing exceptionally better in existing home sales in comparison. Now when will listings peak? They can continue to grow. It could continue at the rate it is like it did in 2020 or Fall, but there are three reasons professionals like myself, think the listings will continue to increase throughout the Fall and into the Winter months.
Now, number one, there is a selling demand and homeowners are starting to feel more comfortable with the idea of putting their home on the market since the pandemic is shifting, and having people into their homes for open houses or property tours is less of a potential risk. Number two, new construction is taking place and starting to grow more rapidly, allowing more options for potential buyers and the current homeowner to consider when they sell. There is no longer a lack of options compared to the options other sellers had in the past. Number three, it is the end of the forbearance and is creating new listings. And do not worry this will not lead to a wave of foreclosures, but it will allow homeowners to be able to sell their homes and have enough equity to more than cover the expenses of actually selling.
Now as far as interest rates are concerned, it’s possible that in the next year we could see the prices come down that may result in the further economic, financial, and confidence challenges, even with the solid buyers in place. Now these drops or flattenings are nothing to concern ourselves with, as they will not come close in comparison to the crash we saw during the Great Recession. Now Freddie Mac shows there is a 3.01% rise in mortgage rates and many factors lead to this increase. The economy is recovering, not as quickly as we would like, but it is slowly making a comeback. So what could all this mean? The buyers purchasing power will cost more and financing will be harder as these rates also will rise.