The National Association of Realtors revealed that median rates for residential property had increased 16% from 2020, according to a CNN news report. After listing a home for about $275,000 in Washington, DC, Ellen Coleman of RE/MAX realty center received 88 offers. Of all these residential property offers, 76 were cash proposals.
The 1800-square feet, four-bedroom home later sold at $460,000, marking an increase of 70% from the initial asking price. According to Coleman, the investor will probably renovate the house and resell it at a higher rate. This is proof that property can be a lucrative business investment, but before you consider investing, there are several things to know about the housing market.
Home Prices Are On A Tear
Chris Stroud, who works for HouseCanary, says, “Home buying dropped when the coronavirus hit the US, with residential property sales plunging by approximately 40%.” House rates have bounced back since May, but the inventory hasn’t until now.”
The median prices for a home are up 16% and 21% in the Northeast and West regions. Cities like Seattle, San Diego, and Phoenix have seen the highest property price gains. One of the reasons home prices are going up is a limited supply. The truth is property development will continue throughout the year, increasing supply. But higher mortgage rates will hinder potential homeowners’ efforts from buying property.
Buy Now Or Wait It Out
Typically, sellers tend to list properties at the start of May. However, according to Realtor.com’s chief economist, Danielle Hale, home buyers will outnumber sellers this year. Buyers who want to wait for prices to drop will likely be disappointed, as rates will remain steady or increase.
Hale adds that demand for homes will slow down when qualifying for Chicago home loans, for example, or financing in other hot real estate markets becomes difficult. At this point, property buyers will opt to live where they are or choose to rent because it’s more affordable. Melissa Cohn, an executive mortgage banker, suggests, if you’re looking for a home and are fortunate to find one you can afford, remember it may not stay on the market for long.
Sudden Drop In Home Buying Trends
If you have been following real estate market trends recently, you’re probably wondering why there are no homes to purchase. The current pandemic is part of the problem, but there are also other reasons that have contributed to the shortage of homes.
Over the last year, many homeowners chose to refinance their homes to a lower rate or affordable home loan repayment terms. All thanks to the record low-interest rates that were available. So, the likelihood of these homeowners moving out from their current homes is low.
Besides, an estimated 2.6 million residential property owners are still in a mortgage forbearance with lenders. While these homeowners might resell their properties to find affordable homes, the chances of doing so right now are minimal.
Owning a home is a life achievement almost everyone strives to achieve. However, purchasing homes right now is becoming difficult. Besides home prices being high, there are no properties to buy, and qualifying for home loans is more challenging than ever.