It’s no secret that the economic crisis resulting from the COVID-19 pandemic has wreaked havoc on the global economy. One of the consequences of this economic turmoil has been the massive effect it has had on the domestic housing market. Since the lockdown began at the beginning of 2020, housing prices have consistently increased and those selling have enjoyed a seller’s market. While many people have sold their homes for a large profit, many people looking to buy are left asking when it will end? Learn with mortgage brokers in Rockville MD to find out where the housing market is now and where it is predicted to head in the coming months.
Sellers Market vs. Buyers Market
A seller’s market is when the housing market has ideal conditions for someone to sell their house and a buyer’s market is when the market sits at a place where buyers benefit. Typically, a seller’s market comes with high-interest rates, and when houses sell for more than they were previously worth. In our current seller’s market, homeowners selling their homes almost always receive more than the asking price. Not only are they selling for more but they are selling quicker. On average, homes last only 20 days on the market. A buyers market, on the other hand, is when the supply is greater than the demand, interest rates are low and homes can be negotiated for below the asking price. The market swings back and forth meaning that due to the conditions of the seller’s market, a buyer’s market will begin to emerge.
By looking at the current statistics of the housing market, we can develop a much better understanding of where it stands now and where it can be predicted to go. Rockville MD mortgage brokers are always breaking down the statistics to gain an idea of where the market is heading.
- Total New Net Listings: 4.2% Decrease versus 52 weeks prior
- A net listing is when the owner sets a minimum amount that they wish to receive for their unit and allows the broker to collect a commission if the unit were to sell for a higher price.
- Monthly New Net Listings: 11.6% Decrease compared to May 2021
- How many new net listings there are by the month. Tracking this by the month allows for Rockville MD mortgage brokers to get a better understanding of where trends are heading.
- Monthly Contract Volume (Single Family Detached Homes): 10.9% Decrease year-over-year
- The monthly contract volume is how many homes are sold in that specific month. In this case, there was a 10.9% decrease in the number of homes sold that month compared to the years prior.
- Median Listing Price: 12.7% Increase year-over-year
- The median listing price is in the middle of the range of house prices currently available. When this number rises it means that homes have gotten more expensive.
- Median Closing Price: 14.4% Increase year-over-year
- A 14.4% increase in median closing price is evidence that homes are closing at a higher price than they did in previous years.
When the pandemic occurred, lenders dropped interest rates to attract more buyers. Since then, this trend has done a complete 180. In a move to combat rising inflation, the Federal Government has raised interest rates by 0.75%, the largest rise since 1994. This has caused the average interest rate to rise to just under 6% for a 30-year fixed-rate mortgage. The last time that interest rates were above 6% was during the 2008 housing crisis. The mortgage rates are expected to remain high in the coming months and may even continue to rise.
Typically, an increase in mortgage rates would deter buyers and thus increase the available inventory. However, the available inventory is yet to show any signs of increasing, indicating that the inventory levels will remain low for some time. New listings are down 7% since last year marking their 21st consecutive annual decline.
The median home sale price has increased 17% year-over-year and homes are consistently selling for more than the asking price. This year homes only stayed on the market for a median of 18 days as opposed to the 26-day average it took last year. Hopefully, as interest rates rise, home prices will decrease. Already, mortgage brokers in Rockville MD have seen 13% of homes dropping their listing price in the past four weeks, an indicator that the seller’s market is cooling off.
Where is the Market Headed?
Before the pandemic, these observations would leave a well-versed Rockville MD mortgage broker optimistic about the housing market’s future and lead him or her to believe that the seller’s market is cooling off. Now, in the post-pandemic economy, it is a lot harder to make these assumptions and estimates due to the unprecedented nature and irregular fluctuation of the market. The biggest indication that the seller’s market is ending is that home prices are beginning to show signs of decline in the spring months which would normally see an uptick in price. While irregular, it does not make up for the severe lack of inventory. Without an abundance of homes, the competitiveness of pricing is lost. The disparity between supply and demand continues to exasperate the seller’s market and with the anticipation of rising mortgage rates, the time for a buyer’s market is still well off.
Mortgage Brokers in Rockville MD Here for You In a Challenging Market
While the market is ripe for sellers to make a healthy profit on their homes, it has yet to sway in favor of buyers. The market constantly fluctuates and with new governmental implementations on the way, a lot is bound to change over time. The best thing that a homebuyer can do in a seller’s market is to find a Rockville MD mortgage broker that will use their expertise to assist in finding the best deal and rates available. At Federal Hill Mortgage, we use over a decade worth of experience to grant our clients the absolute best mortgage possible. Contact the #1 mortgage broker on the east coast, Federal Hill Mortgage and see the difference.