According to the Federal Housing Finance Agency House Price Index (FHFA HPI®), U.S. housing prices rose 12.6% from the first quarter of 2020 to the first quarter of 2021. In addition, housing prices increased 3.5% compared to the fourth quarter of 2020.
This increase in prices has been great for home sellers, but what about the homebuyers? In this article, we will discuss when we can expect the next buyer’s market according to an East Bay Realtor's perspective.
What is A Buyers’ Market?
A “buyer’s market” occurs when purchasers of products have an advantage over sellers when it comes to price negotiations. This typically occurs when there is an increase in demand or a decrease in supply. Currently, the housing supply is limited, giving sellers the advantages (seller’s market).
When is The Next Buyer’s Market?
The question many have is when will the next buyer’s market occur? While no one can predict the future, the following trends could give clues as to when we can expect the next buyer’s market:
Housing supplies are at their lowest levels since the 1970s. This is partly due to increased construction costs and real estate investors quickly purchasing single-family homes. For example, Blackstone Group Inc., a leading global investment business, recently purchased Home Partners of America Inc., a rental company that owns more than 17,000 houses. In addition, homes for sale in 2021 are typically sold within 3 weeks. This indicates the seller’s market will most likely continue.
Since 2011, Statista reports the average sale price of new homes has risen from $267,900 in 2011 to $408,800 in January 2021, a 52% increase. In addition, Zillow expects home values to grow 12.1% between July 2021 and July 2022. This consistent rise in prices gives an advantage to home sellers.
Existing Home Sales
While home prices continue to rise, existing home sales have slowed, falling for the 4th consecutive month in May, 2021. When asked about home sales, Lawrence Yun, the chief economist of the National Association of Realtors responded "home sales fell moderately in May and are now approaching pre-pandemic activity. Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market.” This “squeeze” may continue to benefit home sellers.
Another key factor in predicting a buyer’s market is location. Covid-19 has impacted housing preferences, with many fleeing large, metropolitan areas and opting for spacious, less populated regions. As a result, the decreased demand for condos and townhomes in large cities may favor buyers, while increased demand for suburban homes may be more favorable to sellers.
On August 3rd, 2021, the CDC signed an order determining the evictions of tenants for failure to make rent or housing payments “could be detrimental to public health control measures to slow the spread of SARS-CoV-2, the virus that causes COVID-19.” This order will expire on October 3, 2021, keeping the housing supply low for the near future, helping to maintain the seller’s market.
The Bottom Line
If median home prices continue to rise, many estimate the seller’s market will remain in effect for the foreseeable future. The general trend may favor a seller’s market, but inventory and location can cause a buyer’s market in select areas across the country. While no one can predict the future, keeping a close watch on market indicators can help predict the end of the seller’s market and when the next buyer’s market will begin.
About Range Homes
Are you looking to buy a home? Range Homes realtors are the local East Bay Real Estate experts helping local and soon-to-be residents to buy their first home, to upsize, to downsize, or perhaps to start building a property portfolio. Whether you’re looking to buy or sell a home, our team of professional realtors is ready to assist you. Contact us HERE for more information.
Want to Know More About Our East Bay Realtors?
East Bay CA is known for it's good economy, beautiful landscapes and extremely popular housing market. When other states and territories have experienced decline in housing prices the Bay Area in general has remained strong. This doesn't mean you should not diversify your portfolio across many states, but our East Bay CA Realtors agree that this is certainly a strong place to start for a novice investor. There are even some great low cost homes that are ripe for renovation.
We have a team of friendly, helpful East Bay Realtors that specialize in East Bay CA real estate and property sales that can help you work out how to best get your property portfolio started. Our agents are here to put your needs first, get you the best deals and offers, help you buy or sell your dream home and build your investment portfolio. Reach out to our team today to find out your options.
If you are looking to find an East Bay Realtor, or looking for homes for sale in East Bay CA, or even to sell your home with someone who will make sure you get the best deal and understand your needs - look no further - when you work with us, consider yourself family.