Feel like you might be noticing some similiarities?
Fortunately, today’s circumstances are driven by very different reasons!
In 2006, the lending practices were much more lax. Underwriting was more loose and there were different mortgage products such as adjustable-rate mortgages with big balloon payments due at the end of the term.
“Today it’s really just about lack of supply,” says Robert Dietz, chief economist at the National Association of Home Builders.
There are two main ways homes enter the market and both of them are not in full flow.
- Builders are struggling to catch up.
Deitz blames the constraints in the market to what he calls the “five Ls”:
- Labor
- Lots
- Lending
- Lumber and building materials
- Laws and regulations
- Fewer people are selling.Feel like you might be noticing some similiarities?Fortunately, today’s circumstances are driven by very different reasons!
A survey by Discover Home Loans found 79% of homeowners would rather renovate their homes than move.
There are more buyers deciding that home ownership is for them!
Part of that is millennials entering the market and part of that is due to the fact that the pandemic has made remote and hybrid work possible for many.
When will the market slow down?
Experts surveyed by Zillow predicted it’ll be two years before monthly inventory returns to pre-pandemic norms. They estimated it could be 2024 or 2025 before the portion of first-time buyers again reaches the 45% seen in 2019.
Will rising mortgage rates slow demand?
Dietz says. “The bidding wars are going to cool off.”
Any slowdown caused by higher mortgage rates will make the market a little easier for buyers who are patient, Fairweather says. “By end of summer there should be more homes on the market as not as many buyers will be taking them off the market,” she says.
The market could be in for a shift this year as it copes with higher mortgage rates, Fairweather says. You may want to slow down and consider your options. “I don’t think it’s wise to try to rush the market now because right now the market is adjusting,” she says.