High home prices may finally drive buyers away.
There’s a reason many potential buyers have struggled to purchase a home this year. Limited inventory and low mortgage rates fueled increased demand from buyers. This, in turn, has pushed home prices up to the point that many buyers simply cannot afford them.
In August, the median price of a home sold was $ 356,700. This represents an increase of 14.9% compared to August 2020.
But as home prices may increase, the number of homes sold goes down. According to the National Association of Realtors, sales of previously owned homes fell 2% in August from July. Additionally, sales were down 1.5% from August 2020, the first year-over-year decline in 14 months.
Do you have to wait to buy a house?
Given where home prices are today, it’s no surprise to see sales numbers plummet. Buyers can only stretch their budgets too far to buy a home, and it may be that many are finally realizing that it’s not worth going too far with a mortgage just to take advantage of today’s low rates. hui. Or, to put it another way, many buyers find that while current mortgage interest rates can be very competitive, they are not necessarily low enough to offset astronomically high home prices.
On the one hand, the fact that buyers are backing down on a home purchase may prompt you to do the same. On the other hand, fewer buyers also means less competition. So over the next few months it may be a little easier to buy a home, especially if inventory continues to add slowly but steadily, as we’ve seen recently.
Today the number of offers on a typical house is 3.8, down from 4.5 a month ago. Fewer bids means less bidding wars for buyers today.
So where does that leave you as a potential buyer? Well you can really go either way. You might decide to go ahead with your home search in the hopes of having fewer buyers to compete with. Or you can sit back and wait for more homes to hit the market, which may have to happen before home prices drop significantly. However, we may not see a significant increase in inventory until next year.
Make the right call
Ultimately, your decision should come down to the options you think you have in the current market. If you see homes that you like and that fit your budget and are in a good position for a low mortgage interest rate, it may be worth trying to buy this year. But if you’re struggling to find a home that you can comfortably afford, you might want to put your plans on hold.
Although mortgage rates are very attractive today, there is a good chance that they will remain low until 2022 and even beyond. If you wait, you might reach a point where you will be able to pay less for a house than today.
Your mental health should also play a role in your decision. An unsuccessful house hunt can be a frustrating thing to deal with, and bidding wars can be extremely stressful. If your lack of progress on the housing search front is impacting your state of mind, that alone could be a good reason to pull out of the housing market and try again in 2022.