As you’ve probably noticed, it’s been quite the home buying season so far in 2021!
If your experience has been anything like many real estate agents around the country, you’ve been busy trying to keep your buyers thinking positively during such competitive times while looking for more homeowners willing to sell in order to beef up the home supply in your area.
In this hectic seller’s market of 2021, maybe you’ve seen some crazy things like homes selling for tens of thousands above their asking price. Or homes are drawing dozens of serious bidders within an hour of being listed. We’ve even heard of buyers throwing in crypto-currency or literally offering bags of cash to beat out competitors.
But how long will this craziness last? Will the home inventory increase later this year? Will interest rates rise? Will home prices continue to be through the roof? What can you expect the second half of 2021 to be like for you?
Let’s take a look at what market and industry gurus are predicting for the back half of the year and how it might affect you and your clients.
Mortgage rates to see a modest increase
It looks like mortgage rates will be going up. But considering how historically low rates have been in the last two years, there isn’t anywhere to go but up. The good news is that the increased rate predictions experts are forecasting won’t drastically affect the market.
According to the latest Quarterly Forecast from Freddie Mac, mortgage rates are expected to rise throughout the remainder of 2021. They are estimating about a .12% increase by the fourth quarter, bringing the average mortgage rate to 3.4%.
Those rates will still be low enough to entice homebuyers in the second half of 2021 and will help them bolster their purchasing power. In fact, in the same report, Freddie Mac is projecting that while higher mortgage rates may slow the pace of home sales and control home price growth, overall housing market activity is expected to remain robust. The total home sales – the sum of new and existing home sales – are estimated at 7.1 million in 2021.
Home prices expected to continue upward
With the stiff buying competition we’ve seen in the first half of 2021, home prices have surged. Will those huge profits continue over the last half of the year? According to the experts, yes. Sellers are expected to continue making money hand over fist on their homes.
Joe Seydl, a senior market economist at J.P. Morgan, says those looking to buy should still maintain a “sooner than later” approach because prices aren’t going down anytime soon.
According to Seydl, “housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”
Inventory still low, but help is on the way
Some of your buyers may have been very frustrated so far this year. Finding a home they could afford may have been a challenge. On top of that, offering enough to beat out all the other bidders may have been a losing battle. But here’s some good news you can share with them: help is on the way.
According to George Ratiu, a senior economist from Realtor.com, the last half of 2021 should see more housing inventory than the first part of 2021. Ratiu says, “we have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.”
One major factor contributing to at least a minor surge in home inventory is the improving economy. Another economist, Mark Fleming, offered this viewpoint:
“A growing economy in the summer months has multiple implications for the housing market. Growing consumer confidence, a stronger labor market, and higher wages bode well for housing demand. While a growing economy and improving public health conditions may also spur hesitant existing owners to list their homes for sale, it’s unlikely to significantly ease the super sellers’ market conditions.”
Heading into the last half of 2021, one of the best things you can do for your clients is to keep updated on the latest market trends and projections. They will rely on you to share the most important metrics and how that information can help them maximize their chances of buying the home of their dreams for a price that makes sense for their situation.
Crew, K. C. M. (2021, June 29). What Do Experts See on the Horizon for the Second Half of the Year? Keeping Current Matters. https://www.keepingcurrentmatters.com/2021/06/30/what-do-experts-see-on-the-horizon-for-the-second-half-of-the-year/.
Santarelli, M., & Rollheiser, J. (2021, July 2). Housing Market Predictions 2021 & 2022: Crash or Boom? Norada Real Estate Investments. https://www.noradarealestate.com/blog/housing-market-predictions/.
DianaOlick. (2021, July 2). Epic housing shortage may finally be starting to lift, as surprising number of new listings hit market in June. CNBC. https://www.cnbc.com/2021/07/01/epic-housing-shortage-may-finally-be-starting-to-lift.html.
Zillow Research on Apr. 14, 2021. (2021, April 13). Experts: Work From Home is Here to Stay, and More Inventory is on the Way. Zillow Research. https://www.zillow.com/research/zhpe-q1-2021-work-from-home-29311/.
Quarterly Forecast: As the Economy Recovers, the Housing Market Remains Healthy While Mortgage Rates Move Up. Freddie Mac. (n.d.). http://www.freddiemac.com/research/forecast/20210414_quarterly_economic_forecast.page.