Based on what we’ve seen over the past two years, one thing is clear: the current housing market is one for the record books. As a first-time buyer, here are three key components that are shaping this unprecedented market.
The Shortage of Homes for Sale The number of homes available for sale hit an all-time low in January 2022.As Danielle Hale, Chief Economist forrealtor.com, says:
“We expect that we’ll start to see a turnaround and inventory will stabilize and start to go up a little bit in 2022. . . . But that means we’re looking at inventory levels of roughly half of what we saw before the pandemic. For buyers, the market is likely to continue to move fast. If you see a home you like, you want to jump on it right away. Price appreciation averaged 15% for the full year of 2021, up from the 2020 full year average of 6%.”
Buyer Competition and Bidding Wars The ongoing low supply, coupled with high demand, creates significant buyer competition and bidding wars. Some buyers are offering over the asking price, all cash, or waiving some contingencies. Just remember, you don’t want to waive the inspection, as it’s necessary to determine the condition of the home you’re buying.
Home Price Appreciation
That competition among buyers is driving prices up. Over the past year, home price appreciation has reached record levels throughout the country. According to CoreLogic:
“Home prices rose 18% during 2021 in the CoreLogic Home Price Index, the largest annual gain recorded in its 45-year history...”
The good news is, rising prices helps you know you’re making a good long-term investment. That’s because once you move in, that ongoing price appreciation will help grow your home’s value with time.
Bottom Line To help you find and buy your first home, you need the support of a real estate professional that you can lean on for insights on today’s housing market, what’s happening in your area, and expert advice for how to submit a strong offer at a fair price.