why it’s so hard to buy a home right now
It’s possible that the past year was a challenging one. wild ride for potential homebuyersHowever, reports suggest that 2022 may be more competitive in terms of housing markets.
Current listings for new properties are at an all-time low. Redfin Zillow. Zillow reports that at 2021 there were actually 19.5% less homes on the market than in 2020 and 40% fewer homes up for sale than at 2019. December 2021 Market Report.
That’s driving up prices even higher than last year: The median home sale price was up 14% during the four-week period ending January 16 compared to a year ago, reaching $358,500, per Redfin.
In the last year homes were snapped up hours after hitting the marketMany times, they are often offered at a significantly higher price than what was asked. According to Zillow senior economist Jeff Tucker, this record-low inventory is expected to persist through the spring season.
Tucker says it’s “extraordinary” because of the demands and prices.
The record low supply is due to a variety of factors, such as months of low interest rates and labor shortages that restrict the availability of new construction. Tucker says more home-owners are choosing to take advantage of low interest rates in order to get a second house without the need to sell the first.
But with mortgage rates starting to rise — the 30-year fixed rate surpassed 3.5% earlier this month for the first time since spring 2020 — demand may begin to cool off slightly. It’s especially important for buyers who make investment decisions rather than searching for actual housing.
Though less competition may theoretically benefit first-time home buyers, steep mortgage rates rises and price hikes are likely to keep them away. Tucker says that even a rise from a 3.5% interest rate to 3% will increase a monthly mortgage repayment by 7%.
“Rising interest rate shrink budgets,” says he. For first-time buyers this market is very challenging.”
Thought construction is starting to pick upIt would also help to supply but it must still make up decades worth of U.S. construction to fulfill demand.
Tucker says that this all means that sellers will always have the advantage in the future.
He said that “some buyers will be knocked off the track this spring due to high mortgage rates.”
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