Housing Availability Is Going to See A Pretty Big Boom in The Next Couple Months
The COVID-19 pandemic has caused a significant disruption in economic interactions, with the housing market being one of the hardest hit sectors.
For those looking to buy, the lack of choice has been an absolute nightmare. A reduction in housing construction, a mass exodus to the suburbs, and a desire for more living space following stay at home orders have all contributed to a historic expansion of housing prices.
The combination of limited housing and exorbitant price tags has been a tremendous boon to sellers over the past year, but there are signs that's about to change.
How Prices Managed to Get So High
It was firmly a seller's market even before the pandemic hit, with lots of buyers and comparatively little real estate going on sale.
When COVID-19 came onto the scene, not only was there uncertainty regarding the condition of markets, but there was also the practical issue of going through the process of house selling amid social distances measures and lockdowns.
Despite this, demand for housing actually rose quite a bit, especially from those looking to move from urban areas to the suburbs. This trend was especially prominent in major hubs such as New York City, which experienced tremendous difficulty in dealing with the damaging effects of the virus and the measures taken to contain it.
As working from home became a viable option for many, people began to look for houses to buy in less populated areas, despite housing not becoming more available; causing a major disparity between supply and demand.
This became a further issue when mortage rates began to drop at the behest of the Federal Reserve to contend with the pandemic-induced recession. Home loans became more affordable than ever before and those looking to purchase a house took advantage, causing even more competition for what limited real estate was available.
Hardest Hit Demographics
Although the reduced number of options and high prices has been inconvenient for almost everybody, it's been almost impossible to overcome for those with tight budgets.
Less expensive, lower-end housing has been the most difficult segment of the market to crack, with all the easy to find and accessible properties being purchased almost immediately when they go up for sale. This has left many people with limited funds to be unable to pursue their goal of home ownership.
First-time buyers have also be affected quite heavily as they usually have a preference for purchasing a relatively inexpensive starter house.
Combined, many disaffected demographics have led to a sizeable reduction in the number of mortage applications being completed, with annual applications being 17% lower than last year.
Why Everything Looks Like It's About to Change
Although the supply-demand difference has been substantial, there is some indication this trend is likely to change. When compared to the same time last year, the number of houses up for sale is roughly 43% lower; however, the number of listings increased by 11% from May to June and previous months before that had seen a 50% lower percentage of listings than when compared to the same months in 2020.
It appears as if people are becoming much less reluctant to put their houses up for sale and enter contact with potential buyers. Midwestern cities have especially seen a large increase in the number of listings, with double-digit increases in homes up for sale when compared to previous months.
With COVID-19 largely under control, lots of construction is beginning to start up again, which will increase the availability of housing in the long-run.
The long-lasting unfavorable market for buyers has also had the side-effect of discouraging people from looking for a home in general, at least for the time being. This has reduced the competition for housing by a moderate amount, ultimately allowing for some breathing room and dragging down housing prices in general.
Overall, there are several factors that are a making the housing market more accessible, slowly, but surely.
The housing market has been largely gridlocked for over a year, with sellers possessing a huge, pretty much unassailable advantage when it comes to negotiating a sale. However, much of this appears to be changing.
There are a multitude of indicators that suggest that the market will reach something of an equilibrium in a long-term time frame.
It's unlikely any sudden shocks will occur that change the situation dramatically, although incremental changes will occur that bring things back to a more normal environment.
Other Featured Posts
The Good Neighbor Next Door Program
The Good Neighbor Next Door program gives qualified individuals an opportunity to purchase homes with a significant 50 percent discount. It's intended to encourage community helpers to move into the same communities that they provide a serv...READ MORE
Understanding Government Grants and Financial Aid
If you're going through financial hardship and trying to attain higher education or pay off medical bills, government aid can be extremely helpful. The problem is that many people mistakenly feel that they are entitled to gove...READ MORE
LIHEAP: A Valuable Lifeline for Those Needing Help With Utility Expenses
LIHEAP, formally known as the Low-Income Home Energy Assistance Program, was established by Congress more than 30 years ago. Overseen by the Department of Health and Human Services and operated by state ...READ MORE
First Time Home Buyers Can Find Great Mortgage Assistance Grants
Buying a home for the first time can be intimidating. Many first time home buyers are in need of help. They don't know where to begin. Fortunately, there are many sources of help to provide assistance for many p...READ MORE