Fall housing outlook 2021: Cooling prices, tighter inventory, less competition
The typical seasonal sales cycle looks to be returning to normal after the rush of 2020’s consistent high volume transactions.
It looks like buyers will have time to take in a breath of crisp, fall air as we transition from the summer to the fall real estate market. As the weather cools, so too will competition and housing prices. However, buyers can expect inventory to remain tight. After a busy summer, buyers and sellers alike are slow to return to their sale or purchase process, which will fuel the fall market. We are right at the cusp of the fall market, as new properties are listed daily. Historically, the fall market is not as rushed as the spring and summer markets. However, rest assured, a strong fall market is expected every year. Chances are improving for buyers who may have decided to bow out of the market a few months ago.
What Sellers need to know:
Sellers should be prepared to price according to the current market conditions, rather than solely considering the recent summer sales prices in their neighborhood. Home price growth is slowing and buyers are a bit less frantic than earlier this year. Although interest rates will likely remain low for the near future, allowing mortgages to stay low enough for buyers to afford the space they need. We do not expect home prices to come crashing down at any time soon — but growth may finally be gearing back toward normal levels again.
When selling this fall, adjust expectations for both expected sales price and market time. Inflation rose 5.4% in September, compared to the same time last year. Buyers will have tight budgets for living expenses and mortgages, and will need their new home to be as move-in ready as possible. Consider taking care of as many maintenance issues as possible before listing your property. Compass Concierge can help with the costs of listing preparation and cosmetic updates to get the best price for your home – at ZERO PERCENT INTEREST!
What Buyers need to know:
For buyers, unfortunately, inventory will probably remain pretty tight but market competition will become less heated. Annual home price growth in the U.S. has surged over the last year or so, and is continuing to set records. Annual appreciation was up 17.7 percent year over year in August, according to a recent report from Zillow. However, month over month growth is finally showing signs of cooling. For the first time since January, home price appreciation actually slowed in August from the previous month. It appreciated only 1.75 percent from July, in contrast to the 1.97 percent growth seen between June and July. This means that the extremely high bids that were necessary in the summer will likely have a lower cap now. Comparable closing sales often received offers way over list price. This data set supported recent appraisals, but that is coming to an end soon.
The best advice I can offer to buyers in this ever changing market is to connect with a realtor as soon as you start considering a home purchase. You will benefit from a dedicated professional advising on the right time to purchase based on your personal circumstances. This is valuable in planning your purchase well in advance of pulling the trigger.
Looking into the future:
With more millennials aging into their prime home-buying years, inventory will continue to be an issue moving forward. This trend won’t end until builders, and potentially new legislation, can address it. The City of Chicago has been working on a variety of efforts to relax zoning restrictions in order to increase the housing supply like the ADU pilot program. Things like building higher density housing, building houses closer together, more houses on one plot of land, and also changing zoning regulations to make it easier for builders to build which will add more inventory to the market over time.
Contact the Two Door Group to set your sale or purchase into motion.
Source: Inman, Refined by Adele Lang