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When Will The Housing Market Cool Off – Expert Predictions

The COVID-19 pandemic hit the health sectors of a huge part of the world. However, it also caused a cascade of effects that rippled through various sectors and industries, some of which are still felt up to this point. Some are even projected to have a long-term effect way after the pandemic itself. One of these sectors is the real estate or the housing market.

Housing supply was already low even before COVID-19, but the pandemic brought the housing market to a burning fire. After more than a year, the housing market may not be under the blazing fire that it was on before, but the question is–is the housing market still hot?

Will the housing market finally cool down soon? If so, when would it be? Here are the things that you should know.

What Does A ‘Hot’ Market Mean?

In real estate, the market condition is described using terms in temperature. The market can be cold, hot, or neutral.

There are two types of “hot markets”. In one, the prices of houses are lower than active listing prices. This can happen if there are considerably more buyers out for a house than the usual, which also means that the industry is seeing a higher close rate. There are more buyers, so prices tend to go lower.

Another type of hot market is where there is extremely low availability of homes out for sale, but the interest in the market remains normal, or maybe even growing. In this situation, prices go up because there is only little supply for a demanding market.

What happened due to COVID-19 is a mixture of both. Due to lockdowns all over, a lot of people have clamored to move from one place to another.

A lot of people were also evicted from their current homes due to non-payment (because of loss of income), but the home supply was not able to keep up. At the same time, a lot of homeowners have been reluctant in opening up their doors for potential buyers, further disrupting the supply chain in the industry.

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How ‘Hot’ Was The House Market Lately?

The US Commerce Department reported in July that sales of new single-family homes in the country were at a 14-month low in June. Even contracts for new homes were found at the same all-time low as home builders continue to hold back in building new properties.

The same is real even in the Canadian market, where sales of homes drastically dropped during the peak of the pandemic. A huge number of people wanted to buy homes, but only a few can afford a new one.

At these times, almost all houses that were on the market were pumped way more than the asking price. The market has been described as “so overheated” that the supply fell so much behind the seemingly ever-increasing demand.

Home prices in March 2021 saw the fastest pace in price increase for more than the past seven years. This can be attributed to the increase in demand, but the diminishing supply of homes.

More than a year after the pandemic broke out, has the market cooled down, even for a little?

House Market Predictions By Experts – Will It Finally Cool Down?

Although the market experienced a huge challenge for the past year, experts agree that recovery–or cooling down–is bound to happen, even for a little.

Reports mention that prices were forecast to rise 15.0% on average this year, a number that is significantly larger compared to predictions for 2021 at least two years ago. However, experts within the market warn people to not become too eager about these projected numbers right away.

San Diego real estate expert Kimo Quance warned buyers not to be too eager and grab seemingly lower prices right now, as the market is “still cooling down.” This means that they may look to be lowering down, but things can see a better situation in the future.

This is also what multi family housing expert Patrick O’Sullivan thinks about the market behavior right now. He believes that as the market starts to stabilize more and more, buyers who have delayed their plans either due to high prices or the unavailability of the home they prefer, may reemerge to buy once more.

Canadian real estate broker Kevin Scharfenberg also echoes the same idea. For him, the market is looking to be cooler as months go by. If you have been looking to buy a home for the past two years now (which means that the COVID-19 pandemic affected your plans), then sitting this one out a little longer could prove to give you more savings and potentially, better deals.

As A Buyer, What Should You Do?

Unless you have enough cash, or you are willing to compromise things you want for your home, making a purchase during a hot market is not a wise choice. As the market starts to cool down, what is the best course of action for a potential buyer?

Among other things, you can take this opportunity to improve your credit score. A good credit score means you can obtain better deals and lower interests, so take the time to boost your score.

Aside from that, make use of the time to save up for a down payment. Usually, the lowest down payment you can avail can be at 20% (sometimes even lower, if you encounter a promotion). Keep in mind that the higher down payment you can afford, the lower your interest can be and thus the lower your monthly amortization would be.

So, don’t rush in just yet. Give the market more time to further cool down, and make use of this time to prepare yourself for a future purchase as well.

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Before You Go

A lot of sectors and industries were hit by the COVID-19 pandemic–including the housing market. However, the projections are speaking of good things and the start of recovery.

If your home purchase or home building plans have been delayed due to the market becoming too hot, now may be the best time to get back to preparing again.


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When Will The Housing Market Cool Off – Expert Predictions

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