Cooler weather is often a welcome relief from hot summer days, and a cooler market can provide some relief to homebuyers in Alabama as well.
In addition to the usual seasonal market downturn, Lawrence Yun, chief economist at the National Association of REALTORSÂ®, sees a cooling trend in the market, with early buyers on the sidelines due to high home prices. It also predicts an increase in rental prices as workers return to work but cannot buy homes.
As always, the real estate market is sensitive to a number of factors, including the inventory of existing homes, new home construction, employment and mortgage rates. Now, supply chain issues are impacting the market as building materials, appliances and furniture delay new construction, as well as home repairs and renovations. Here’s a look at the trends to watch for in the coming months.
2021 was an unusual year as historically low mortgage interest rates, lack of inventory and a pandemic created bidding wars leading to higher house prices, according to Bankrate.com.
Current average mortgage rates are up 3.2 percent from January’s low of 2.65 percent on a 30-year fixed-rate loan, according to The Mortgage Reports.
Citing rising inflation and consumer spending, falling jobless claims and allaying COVID-related fears, Mortgage Reports suggests the Federal Reserve may curb some of its pandemic-related measures that have maintained low rates.
Mortgage experts expect rates to continue rising from an all-time low reached earlier this year. In a recent MarketWatch.com newsletter, NAR’s Yun predicted that home sales would drop in 2022 – at a rate of 3-5% – as mortgage rates rise.
The COVID pandemic has sparked a home buying spree with record prices, according to Bankrate. âThe median price of an existing home has exceeded $ 350,000 for the first time. The median price of new homes has just eclipsed the $ 400,000. This boom is a boon for sellers and a challenge for buyers, who increasingly have to stretch their housing budgets.
Home prices are unlikely to fall, Yun says, but future gains will be moderate. âReal estate has turned out to be a great investment with good financial returns. The gains will continue, but will be more moderate in the months and years to come. “
Housing economists agree that the boom is about to wind down. The Mortgage Bankers Association expects the annual appreciation to cool to 5% by the end of 2022. NAR and the National Association of Home Builders have a similar outlook.
Bankrate cites low inventory levels as the dominant factor in the housing market. âYou are dealing with the lowest housing stock we have seen in history,â said Noerena LimÃ³n, executive vice president of public policy and industry relations at the National Association of Housing Professionals. Hispanic real estate.
She predicts that inventory problems will persist for several months despite an increase in housing starts, as home construction takes time. Robert Dietz, chief economist for the National Association of Home Builders, agreed that building new homes would not have much of an impact until the end of 2021.
Dietz said supply chain issues are expected to continue to ease, although some materials and devices will continue to be affected by shortages and delays.
Bankrate predicts that the market will remain strongly in favor of sellers until the end of the year. “Experts say the regular seasonal slowdown in transactions will take place, and after months of extraordinary competition among buyers, winter will give everyone a chance to catch their breath.”
As we approach the end of 2021, the real estate market will feel a little more normal than in the past 18 months. But housing demand will remain high, and the fourth quarter of this year should set things up for another busy market in 2022.
The Alabama Association of REALTORSÂ® (AAR) is the largest organization of real estate professionals statewide with more than 18,000 members from 24 boards of directors and 1,200 real estate companies . United by adherence to a code of ethics, our members work as real estate professionals in the sale, rental, appraisal, management and development of residential, commercial, rural and resort properties in all over Alabama.