Has the Market Started to Stabilize

    As reported by the National Association of Realtors, in January 2021 the inventory of homes on the market hit a record low since the year 2000. Regardless of buyers flooding the market, the short supply of houses on the market has only fueled home prices. This article lays out the 4 reasons as to why a buyer’s market isn’t in our near future.

    A few highlights from the article:

    • Inventory is at an all time low since the year 2000
    • There’s a definite correlation between demand and home prices
    • Cash buyers have a competitive edge that sets them apart from those who are financing
    • It would take a big event to send home prices plummeting

    What’s keeping this market competitive?

    The market’s incredibly low supply and high demand is fueling this competitive market…but it’s not the only thing to blame. 

    The influx of cash buyers adds another layer to this market. As a cash buyer you have an edge in a seller’s market because sellers don’t have to worry about your financing falling through. As mentioned in 4 Predictions on Housing Prices This Year, statistically about 30% of all transactions right now are cash buyers. 

    What to expect?

    Although we see a subtle shift in the market, in order for prices to significantly decrease, this would require a drop in demand. As interest rates increase buyers aren’t wasting any time to get into contract on a home while they can still afford it! We predict home prices will continue to rise, but just at a slower rate. Once things start to slow down, then we will likely see the market start to stabilize. 

    Economists say that a housing bubble like 2008 is highly unlikely to occur because the market is fundamentally different from 2008. In a recent article from FORBES, they wrote “Among the differences between today’s housing market and that of the 2008 housing crash is that lending standards are tighter due to lessons learned and new regulations enacted after the last crisis. Essentially, that means those approved for a mortgage nowadays are less likely to default than those who were approved in the pre-crisis lending period.”

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