August 2021 Market update
The housing market in the United States has been experiencing a significant boom in recent years. Home prices have been soaring, supply has been limited, and buyer demand has been high. However, many are now questioning whether this housing boom is coming to an end. In this blog post, we will examine the current state of the market and provide insights for both sellers and buyers. So, let's dive in!
Current Market Conditions
The headlines have been buzzing with conversations about the housing market. Massive price appreciation, limited supply, and a buying frenzy have been dominating the news. These factors have led many people to draw comparisons to the housing crisis of 2008, raising concerns about the sustainability of the current boom.
Buyer Traffic Trends
While it's true that buyer traffic has slowed down from April to May and June, it's important to note that the market is still strong. Graphics 4-7 illustrate this trend, with darker shades of blue representing stronger buyer traffic. Despite the slight dip, June's buyer traffic levels are still higher than those of the same month last year, as shown by the data from the ShowingTime Monthly Index (Graphic 8).
Lawrence Yun, chief economist of the National Association of Realtors, shares his perspective on the situation (Graphic 10). He believes that home prices are not in danger of declining due to tight inventory conditions. However, he does anticipate a slower pace of price appreciation by the end of the year. This suggests that while the market may be cooling down, it remains a seller's market (Graphic 9).
Tips for Sellers
If you're a seller, there are a few key considerations to keep in mind:
Pricing Matters Again: As the market slows down, it becomes crucial to price your home appropriately. Setting a competitive and realistic price will attract potential buyers and increase your chances of a successful sale.
Home Preparation Matters Again: In a hot market, some sellers could get away with minimal home preparation. However, as the market shifts, it's important to invest time and effort into preparing your home for sale. This includes decluttering, staging, and making any necessary repairs or improvements.
It's Still A Seller's Market: Despite the slight slowdown, the market still favors sellers. The limited supply of homes continues to drive up prices, allowing sellers to benefit from strong demand.
Tips for Buyers
For buyers, the changing market conditions present opportunities as well:
Take Advantage of Buyer Fatigue: With the frenzied pace of the housing market, many buyers have become fatigued and have put their search on hold. This presents an opportunity for you to negotiate better deals or find properties that were previously out of reach.
You Can Keep Your Cash: In a cooling market, buyers may have more bargaining power. This could potentially allow you to negotiate lower prices or secure better terms. It's a good time to leverage your position as a buyer and hold onto your cash for other purposes.
It's Still A Seller's Market: Despite the potential advantages for buyers, it's important to remember that the market still heavily favors sellers. Limited supply and strong demand mean that competition can still be fierce, requiring buyers to act decisively when the right opportunity arises.
While the housing market may be experiencing a slight slowdown, it is not necessarily an indication that the housing boom is over. Prices are still expected to appreciate, albeit at a slower pace, and the market remains favorable for sellers. Buyers, on the other hand, can take advantage of the changing conditions by being strategic in their approach. By staying informed and understanding the dynamics of the market, both sellers and buyers can navigate the current housing landscape with confidence.