While it had seemed like nothing could slow down the housing market, the rate of price growth is slowing and fewer buyers are applying for mortgages. Competition for homes on the market may not be as intense as it was, and buyers may be finding more opportunities to purchase a home. However, housing and economic experts do not think we’ll be seeing a repeat of the last housing bust.  Prices are not expected to plummet. In fact, in the week ending June 19, median home list prices were 12.2% higher than the same time last year. However, this is less than the 17.2% year-over-year jump in April. 

There are some reasons for the slow down. Many homebuyers have been priced out of the market. There is a severe inventory shortage. Also, as we start the return to our pre-pandemic lives, potential buyers who have been working from home may decide they don’t want to experience long commutes as they go back to their offices. However, this doesn’t mean that home prices will soon be falling. Simply put, it is a matter of supply and demand. There are not enough homes available for the people who want to buy them! In addition, new home construction is being constrained by a combination of fast-rising lumber prices, local zoning laws, shipping delays, and labor shortages. And interest rates remain at historic lows. As long as they stay around 3%, mortgage payments will be more affordable for buyers. If rates shoot up, that may impact the market.

Sellers may keep prices high. Some imagine they can get more than what a neighbor sold for. If bidding wars don’t produce the price they wanted, they can take their home off the market. They may not be willing to sell for prices lower than today’s market. However, the need for more space may no longer be a driving force for buyers as they return to offices, children return to schools, and will be able to attend theaters, concerts, sporting events, and travel more freely.  We’re in uncharted territories, but signs seem to indicate that if you are thinking of selling, now is the time. If you have been thinking about selling, give me a call to discuss your options.