Anyone looking to buy or sell a home within the last few years knows that the real estate market has been in constant flux. A recent analysis of the 2022 market provided data regarding yet another shift that may influence homebuyers looking to move in the next few months. Tim Ellis, a housing market analyst at Redfin, recently shared these research findings, coming to the daunting conclusion that homebuying is faster and costlier than ever before. Here’s a deeper look into Ellis’s report and what this could mean for prospective buyers and sellers.
What has changed?
In the first few weeks of the year, there have been a few shifts in market prices and the speed of home purchases.
The rise of market prices
Prices have reached an all-time high with the “median home sale price […] up 15% year over year.” This means homebuyers looking to purchase a home under current market conditions could expect to find prices much higher than in the years, or even months, prior. While this is appealing to sellers, homebuyers could expect higher mortgage payments, with median asking prices rising upwards of $1,900. According to Redfin, this is a 27% increase from the same time in 2021 and a 31% increase from the same time in 2020. The median asking price of newly listed homes has also increased as market prices continue to soar.
Additionally, the increased speed of the sales process is likely to affect homebuyers who struggle to make fast decisions. In fact, according to the Redfin research, “57% of homes that went under contract had an accepted offer within the first two weeks on the market.” Additionally, 41% of homes sold during this period were above list price with little to no price drop while they were on the market. With such a quick rate of homebuying, prices will remain high and buyers shouldn’t hold their breath waiting for the list prices to drop.
What this means for homebuyers
For those looking to purchase a home, adhere to the age-old phrase “buyer beware.” With high listing prices, fewer price drops, high mortgage payments, and fast-selling rates, purchasing a home may be more difficult right now. The high demand of buyers and the low supply of houses creates a competitive market where buyers should expect to pay more than the listing price to out-buy others interested in the same property. Financing aside, buyers now have to make quick decisions to land the house of their dreams. A home is, obviously, a very significant purchase, and it can be stressful to decide without taking all the time you need to consider your options.
Fortunately, if you intend to sell your current property before embarking on the homebuying process, you could find these market changes to be beneficial. Higher selling costs give you more money to work when purchasing your next property. If you’re downsizing or moving to a neighborhood where list prices are lower than your current area, you may find the market to be quite favorable.
Is now a good time to sell?
With expedient purchases and higher home prices, the housing market currently favors sellers. If you’re looking to sell your home under current market conditions, you’ll likely be able to receive higher offers than in years prior. Additionally, you won’t have to worry about dropping the listing price as the market is so hot that prospective buyers are quick to show interest in new listings.
Unfortunately, if you intend to move and purchase a new property, you could face challenges with high mortgage rates or costlier listing prices as you become a buyer yourself. Depending on your situation, you could benefit from higher selling costs by moving into a less expensive home. If you’re looking to expand or move into a higher-priced neighborhood, you should prepare yourself to face similar financial woes as your fellow homebuyers.
With home listings and mortgage payments at an all-time high, buyers need to beware as they embark on their journey to find their dream home. Since the current market conditions favor sellers, some homeowners may find the circumstances favorable, while others may want to hold off until prices lower or become more stable. Depending on your unique situation, this market change could be daunting or welcome. Still, if you plan to buy a home within the next few months, we advise you to proceed with caution and work with experienced real estate professionals to determine what’s best for you, your family, and your finances.
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