Why Is the Housing Market So Hot Right Now?
You don’t have to know why the housing market is running hot to buy a home. However, understanding some of the basic factors at play may help you make more informed decisions and allow you to feel more confident about them as you try to navigate the real estate market.
Blame Easy Financing, High Demand, Limited Supply
Why is the housing market so hot right now? Grid breaks it down:
- Easy financing: Interest rates near zero prompted people to take the plunge and buy homes. While rates are rising slightly now, they still remain fairly low.
- High demand: Thanks to the pandemic and the shift to remote work, people were eager to find more space. Buying homes was one way to do that. It also pushed the demand to nontraditional areas, spreading the hot housing market across the country as people who worked remotely set up their home base farther away from the office.
- Limited supply: While demand can change quickly, supply is less flexible. Before the pandemic began, there were generally just over 1 million active real estate listings for buyers to peruse. At its lowest, the selection fell to around 375,000. As of July of 2022, it’s returned to around 400,000. Supply is a mix of existing homes and new construction. In recent years, new construction often slowed or became more expensive as the pandemic interfered with efforts to find workers and the broken supply chain made getting supplies difficult.
Expect the Heat to Last
Nothing is certain, but experts say the market is likely to stay hot through 2022, according to Better Homes & Gardens. While the competition for homes has dropped slightly, it’s still thriving, and prices are still high. Plus, supply, which has been tight for decades, isn’t expected to meet demand any time soon. That means the housing inventory will remain low. That low inventory will keep both prices and demand high for quite a while. This is especially true since more millennials are expected to enter the housing market. What about fears of a housing crash? Many experts say that’s overrated. They point to the fact that the majority of homeowners have positive equity in their homes. This decreases the risk of defaults and adds strength to the market.
Use These Tips for Buying in a Hot Market
When buying in a hot market, you face fierce competition from other buyers for a limited number of desirable properties. To maximize your chances of success, The Balance offers these tips:
- Get preapproved before you go home shopping. Getting preapproved shows that you are serious about buying a home. It also confirms how much you’re able to borrow.
- Choose an effective real estate agent. In a hot market, there’s no room for error or hesitation. You need an effective professional who can guide you seamlessly.
- Consider a wider search area. With fewer homes available, casting your eye over a wider area than you might have originally considered will give you more possibilities.
- Prepare to act fast. When competition is tight, homes sell fast. You need to be prepared to move quickly. Have information and documentation that you might need ready. Think carefully so that you know what your limits are. Don’t get pushed beyond them.
- Be ready to pay more. Demand is high, so buyers are paying more than the asking price. Other ways to make a competitive offer include making a hefty earnest money deposit or offering to delay possession.
In a hot real estate market, working with professionals who know the ins and outs of that specific market makes all the difference. At PrimeLending Dallas, our local expertise paves the way for a smooth experience as you reach for your housing goals. Contact us today to talk with one of our home loan experts.