Kevin is the Founder of Marker Real Estate, an innovative firm with a transparent, inclusive, client-focused strategy.
In early July 2021, Fannie Mae confirmed something that most real estate professionals already knew: Buyers and sellers are currently on a very different page. Over half of buyers (64%) think it is now a bad time to buy. By contrast, an even higher percentage of sellers (77%) think it is a great time to sell. But are the nation’s sellers and buyers right — is it really a bad time to buy and a great time to sell? And if they are right, what is likely to happen to the real estate market in the final quarter of 2021?
Bad Time To Buy, Good Time To Sell? It’s Not So Simple
On the buyer side, there are many reasons to be wary about buying at this time. In addition to the cost (some economists have suggested that home prices are currently inflated by15% to 20%), inventory is low and competition is fierce. Still, these factors shouldn’t necessarily hold buyers back. It may still be a great time to enter the market for anyone who was already planning to buy and financially ready to do so.
On the seller side, there is no question that the past year has offered many opportunities. Given the shortage of inventory in most regions of the country and the high demand for homes, many rural and suburban homeowners continue to realize phenomenal returns on their properties. In some small towns, prices have soared up to 25%.
Three key factors are fueling the current low inventory and high demand for homes, especially in rural and suburban areas. First, even before the pandemic, many millennial families were already leaving cramped quarters in urban areas for suburban and rural locales. Secondly, remote work, which seems here to stay, is expanding where people can live. Finally, buyers who may have once preferred to invest in a new home are increasingly looking at resale options as supply-chain problems continue to hamper the ability of developers to complete projects.
Given the potential to turn a huge profit on one’s home, owners certainly have many reasons to sell at this time, but there’s a catch. Unless you’re moving to a market that isn’t currently suffering from shortages or you’re planning to downsize (e.g., to sell a large suburban home to move into an urban condo), finding a new home may prove difficult and costly. So, is it a good time to sell? Yes, but likely only if you’re committed to radically changing your own living situation. Selling your current home with the hopes of landing a great deal on a similar or larger home in the same community may backfire.
Predictions For The Final Quarter
With so many sellers under the impression that this is a great time to sell, it seems likely that more sellers will come out of the woodwork over the coming months. After all, why not see how much you can get for your home in today’s hot market, even if you weren’t planning to sell? If more sellers do come forward, this should result in an overdue market correction, eventually bringing home prices closer in line with current home values.
But what if the buyers don’t return? There is a small chance that even as inventory increases, buyers will remain wary. In this case, we could see an overcorrection of the market. However, given the current demand for homes and the ongoing supply-chain challenges facing developers, an overcorrection seems unlikely.
All things considered, my prediction for the final few months of 2021 is that that market will remain hot but adjust to become slightly more buyer-friendly, creating great opportunities for sellers and buyers alike as we look ahead to 2022.