September 22 marked the start of the fall real estate market. As a result, buyers should pay special considerations to the trends that appear most likely to carry over to the colder months. Doing so will not only give them a better idea of what to expect in the coming months, but also an advantage over the competition. If for nothing else, the fall real estate market has a lot of ground to make up from the pandemic. It is reasonable to assume a great deal of pent-up demand will carry over into the latter part of the year. As such, investors who position themselves well now are going to be more likely to benefit in the coming months.
Don’t underestimate what is typically a slower period for the housing market, and be prepared for what is likely to be an active season. That said, there are six things every buyer should keep in mind as we delve deeper into the fall real estate market.
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The fall real estate market hasn’t become synonymous with the frenzied pitch of its summer counterpart. However, fall real estate trends may look different this year. The introduction of the Coronavirus has certainly thrown a wrench into the way the housing sector operates, but that doesn’t mean industry professionals can’t be prepared. Let’s take a look at the six things everyone should know about the fall real estate market:
The median home value in the United States is $248,857, according to Zillow — that’s a 4.1% increase from the same time last year. It is worth noting, however, that this fall real estate market may witness home values drop in some areas for the first time in eight years. The Coronavirus has caused a bottleneck in the housing sector, dropping activity across the board. Over the next year, prices are expected to drop a modest 1.5%, and fall may be the starting point. That said, any price drops are only expected to be temporary. Pent-up demand has already increased prices in some areas, and low-interest rates are being used to spur more activity. While prices may drop in the near term, it is reasonable to assume they will start climbing again sooner rather than later. As a result, the fall real estate market may be the perfect time to buy a home.
It’s no secret: inventory levels have been the one factor preventing the housing market from realizing its full potential. There simply aren’t enough homes to keep up with demand, and it doesn’t look as if the fall real estate market will provide us with any answers. Notably, there are new construction projects on the horizon, but they won’t be ready to add to the pool of inventory anytime soon. For now, we are stuck with insufficient inventory, and the pandemic has halted many new construction projects. Look for inventory shortages to increase competition, and perhaps even contribute to higher-than-usual fall prices eventually.
To keep the housing sector afloat amidst the pandemic, the Fed has announced it will continue to keep mortgage rates low for the next few years. The Fed’s idea of low, however, was lower than a lot of people anticipated. As of August, 30-year fixed-rate mortgages carried an interest rate of 2.94%, according to Freddie Mac. At that rate, borrowing costs are historically low. Mortgage rates are so low buying activity is starting to inch higher in many cities. Buyers aren’t sure exactly how long rates will remain this low, but for now, the catalyst is working. Today’s rates are saving buyers thousands of dollars over the life of the loans, and nobody wants to miss out.
Again, the fall real estate season is expected to see a market firing on all cylinders. Of particular importance is the pace in which the pistons will be firing. Due, in large part, to the inherent lack of inventory, competition is expected to be fierce over the available properties. I would expect the average home for sale to receive multiple offers, making time of the essence for interested parties. At the very least, it’s safe to assume prospective buyers will jump on those properties they find that fit their criteria. What’s more, they will likely do everything they can to facilitate a timely transaction to avoid interference from the impending competition. It is reasonable to assume the days on market will drop in the fall real estate market, which means buyers need to be ready to act fast and decisively.
Despite the pandemic, demand remains strong. It would appear as if everyone who wanted to buy before the pandemic still wants to buy today; it’s as simple as that. While today’s unemployment numbers have shaken a lot of buyers’ confidence, there still seems to be healthy activity in many cities. However, unemployment has already improved drastically since it spiked in March, and it should continue to do so well into the fall real estate market. The more people that find jobs, the more likely demand will continue to increase. In addition to more people having jobs, Millennials are now coming of age. Expected to make up the largest portion of homebuyers this fall, Millennials are heavy favorites to drive demand in the latter part of the year.
The end of the year is backloaded with several different holidays, not the least of which tend to correspond with their year-end sales. November is practically dedicated to sales; everyone from department stores to online retailers attempt to compete for consumers’ business by offering amazing deals. As a result, anyone with a home is awarded the opportunity to secure some amazing deals on things for the house. It is very common for everything from kitchen sinks and refrigerators to hard-wood flooring and skylights to be on sale at the end of the year. Homeowners looking to make improvements need to take advantage of these year-end sales if they are looking to save some money. What’s more, the money saved at the counter can increase the value of a home, which can indirectly save homeowners even more money.
The fall real estate season has become synonymous with the tapering off of summer trends. In other words, fall is when we typically see the market start to slow down, but this year may be an exception to the rule. If for nothing else, the reasons I discussed above should carry over summer’s momentum into the colder months. It stands to reason that those buyers who can identify these trends stand a better chance of realizing success.
There are several trends experts expect to carry over into fall from the summer real estate market.
It stands to reason that those investors who can identify the most likely real estate trends of fall will find themselves with a distinct advantage.
Home prices are expected to rise and inventory should remain low, but the fall real estate season still looks like a great time to buy.