Key Opportunity for Homebuyers
By now we all have heard of or experienced the housing market delivering a fair share of challenges to homebuyers over the past two years. And more challenging to those who are a first time homebuyer. Two of the biggest hurdles homebuyers faced during the pandemic were the limited number of homes for sale and the intensity and frequency of bidding wars. The bidding wars made it even more challenging to a first time homebuyer competing against cash buyers and those waving all inspections. But those two things have reached a turning point.
As you may have already heard, the number of homes for sale has increased this year, and even more so this spring. As Danielle Hale, Chief Economist for realtor.com explains:
“New listings–a measure of sellers putting homes up for sale–were up 6% above one year ago. Home sellers in many markets across the country continue to benefit from rising home prices and fast-selling homes. That’s prompted a growing number of homeowners to sell homes this year compared to last, giving home shoppers much needed options.”
This is encouraging news, especially to a first time homebuyer. More homes coming onto the market give you a greater chance of finding one that checks all your boxes.
Buyer Competition Moderating Helps Inventory Grow Even More
Mark Fleming, Chief Economist at First American, says, inventory growth is happening not just because there’s an increase in the number of listings coming onto the market, but also because buyer demand has moderated some in light of higher mortgage rates and other economic factors:
“There has been a pickup in the inventory that we've seen recently, but it's not from a big increase in new listings . . . but rather a slowdown in the pace of sales.
And remember that months’ supply measures the inventory of sale relative to the pace of sales. Same inventory, fewer sales, means more months’ supply.” Basically, the market is shifting away from the frenzy of buyer competition seen during the pandemic, and that’s helping available inventory grow. In their latest forecast, realtor.com also mentions the moderation of demand as a key factor and projects the inventory growth should continue:
“As rising inflation and mortgage rates bring U.S. housing demand back from the 2021 frenzy, . . . inventory will grow double-digits over 2021 and offer buyers a better-than-expected chance to find a home.”
How This Impacts You
The combination of more homes coming onto the market and a slower pace of home sales means a first time homebuyer will have more options to choose from as they search for their next home. That’s great news if you’ve been searching for a while with little to no luck. Just remember, there isn’t a sudden surplus of inventory, just more homes to choose from than even a few months ago. So, you’ll still want to be decisive and move fast when you find the right home for you.
And when you do, you may be faced with less competition from other buyers too. If you are a first time homebuyer waiting to jump into the market because the intensity of the bidding wars was intimidating this is your time. Even if you are not a first time homebuyer but you’ve been outbid on several homes, this moderation could help make the home buying process a bit smoother. It’s not that it’ll be easy or that bidding wars are a thing of the past – that’s not the case. But it won’t feel nearly as impossible.
As the housing market begins its shift back toward pre-pandemic levels, you could have a unique opportunity in front of you. With moderating levels of buyer competition and more homes actively for sale, your home search may have gotten a bit less challenging. Let’s connect to begin the process today.
Karen Manzanares, Realtor
Derrick Real Estate, Inc.