The real estate industry has been in a constant state of change since the pandemic began in early 2020. It has become incredibly difficult to predict what’s going to happen next with all of the policy changes happening overnight. Luckily, Homelight has been conducting online real estate agent surveys to learn about market trends and what agents are seeing in the field. Their summer / fall 2021 survey polled over 1,100 agents and revealed some interesting insights for how the real estate market will look for the rest of 2021.
1. Buyers can’t handle the outlandish prices
According to Homelight’s Top Agent Insights Summer / Fall 2021 Report, 54.4% of agents experienced or knew an agent who experienced a buyer backing out of purchase contracts because of second thoughts about the price. Typically, this would occur after an intense bidding war causing the buyer to bid over their budget and secure the listing. Although they were motivated to win the bidding war, they couldn’t stomach the price in the following weeks and backed out of the contract. This is resulting in many homes going back on the market with a “stigma that something is wrong with it,” but in reality, buyers just can’t handle the outlandish prices.
2. Buyers are seeking more affordable housing because of bidding wars.
With the slight increase of inventory, the buyer landscape is quickly changing. According to the report, “agents who say ‘bidding wars in my market are on the rise’ declined to 37% — down from 52% the quarter prior.” This was the first decline of this statistic since Q4 2020. The report also shows that “agents who say bidding wars are at their peak grew from 42% to 54%,” which means intense bidding wars may not be as apparent in the coming months. Victoria Ro is an agent in the western D.C. suburbs and she says listings that usually garner 20+ offers are only getting around 5 now.
3. Sellers aren’t as afraid of COVID-19 anymore.
One of the biggest impacts of COVID-19 was not being able to have open houses because many homeowners didn’t want to contract the virus. As the vaccine rolled out across the country, the pandemic fears began to subside for sellers and 45.4% of agents saw that sellers didn’t have as many health concerns about putting their home on the market. This may bring a slew of inventory into the market in the coming months.
4. Construction costs are still on the rise.
Framing lumber is an essential resource for building houses. According to the report, the cost of framing lumber rose from $350 to $1200 throughout the last year and this would add almost $36,000 to the value of an average new home. The report also references a recent study from the NAR that shows there has been an “underbuilding gap of 5.5 to 6.8 million housing units since 2001.” These statistics show that the price of home construction will continue to increase home prices this year unless there is a government assistance program.
5. Cash is still king.
Despite low interest rates bringing in a plethora of buyers into the market, sellers will always seek out the cash offers first. According to Homelight’s report, 30.1% of agents say buyers want to participate in the market right now because of low interest rates. These buyers are extremely motivated, but a cash offer will always trump a bid that is financed.
Click here to read Homelight’s full report!
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