After the housing market crash, there was a huge drop in demand for homes, creating a market for temporary buyers. Get privileged access to our best tools and financial content At Bankrate we strive to help you make smarter financial decisions. While we respect strict editorial integrity, this publication may contain references to products from our partners. Here's an explanation of how we make money.
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Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial team is objective, fact-based and not influenced by our advertisers. After an unprecedented streak in which mortgage rates fell to record lows and home prices soared to new highs, the U.S. UU.
While demand and price gains are cooling, any correction is likely to be modest, according to economists and housing analysts. Nobody expects price drops in the magnitude of the declines experienced during the Great Recession. Now, the bidding wars have largely vanished, inventories have loosened and the feeling of foam has disappeared. Housing economists agree that prices could fall, but the decline will not be as severe as the one experienced by homeowners during the Great Recession.
An obvious difference between now and then is that homeowners' personal balances are much stronger today than they were 15 years ago. The typical homeowner with a mortgage has stellar credit, lots of equity and a fixed-rate mortgage set at a rate well below 5 percent. In addition, builders remember the Great Recession very well and have been cautious about the pace of construction. The result is a continuing shortage of homes for sale.
Yun says high-priced regions, such as California, are the most vulnerable to falling prices. The Midwest, on the other hand, is unlikely to see a drop in home prices. Overall, expect domestic prices to remain stable next year. Housing economists point to five compelling reasons why no crash is imminent.
The full recovery of New York City's real estate market and the economy as a whole depends on potential future closures in New York City, as well as on the speed and efficiency of vaccine distribution, which can help businesses reopen at full capacity with no restrictions at all. I live in Georgia and we've been stuck in this seller's market for months with no luck buying a house. But as a seller, you'll expect to list your home on a seller's market, so there are fewer properties for sale and a substantial number of interested buyers. On the contrary, sellers must compete on price, or else they risk staying in the market longer than expected or even withdrawing their ads.
Don't expect to deviate from that pattern this year, says Dennis Shirshikov, head of content at real estate investment site Awning. The Warburg report agrees with separate data showing a definite cooling in the New York housing market. However, regardless of the conditions in your area, hiring a real estate agent is the best way to navigate the real estate market. Rick Sharga, executive vice president of market intelligence at ATTOM Data Solutions, expects declines of 5 percent.
Prices follow trading volume, so the current market slowdown suggests that prices will most likely peak. There is still a significant amount of market activity from buyers who are willing to pay in cash or have huge budgets and pay little or no attention to rising interest rates. In addition, increased interest means that buyers rarely have the power to negotiate and are more willing to accept properties as they are. As peak shopping season approaches, buyers are likely to see homes selling just as quickly, if not faster.
Traditionally, real estate market activity tends to slow in the fourth quarter, a period that is usually the slowest three-month period of the year. Even so, the balance of power seems to be shifting to buyers and not sellers, just as the market is heading into the summer season, which is usually slow. During bidding wars, buyers make competitive offers and increase the price, usually above what the seller originally requested. If, as a result, potential buyers are left out, the upside will be an increase in home inventory, which in turn could put more pressure on sellers to lower their prices, all of which means a long-overdue correction for the housing market.