Signs of softening housing markets and a leveling of mortgage interest rates have some industry observers asking if America is heading back to a ‘normal’ home-buying market.
“For first-time buyers, more options and favorable financing offer the promise that after a year of frustrating bidding wars, finding the right home may finally be within reach,” George Ratiu, manager of economic research at Realtor.com said this week. “More listings are coming to the market these days, which is alleviating some of the supply crunch that prompted record increases in home prices.”
Marco Santarelli, founder of Norada Real Estate Investments, says “new sellers are entering the market at near-normal levels,” in part thanks to cooling home prices. “Median listing prices in several metro areas are continuing to fall, owing to an increase in lower-priced houses,” he notes.
Greg Toschi, CEO of Poplar Homes, doesn’t see the same trend.
“The real estate market in the first half of 2021 bore the surging demand from a millennial reshuffling,” he said. “Millions of older millennials are creating families and were planning to buy a home in 2022 to 2025.”
Toschi says some of the recent surge in prices is seasonal, but he believes the overall demand pressure will still remain high. “Inventory numbers are also climbing,” he said. “But prices probably won’t go down much as normal.”
If inventory is the pathway back to normalcy, data indicate challenges still remain. According to the most recent report from the National Association of Realtors, while the inventory of unsold homes increased 7.3% to 1.32 million from June to July, that is just 2.6 months of inventory — half of the “normal” supply.
“I would hesitate to ever call a market that we would see this decade a ‘buyer’s market,’” Skylar Olsen, a senior director and principal economist at mortgage startup Tomo said last week. “But it is getting friendlier.”
And in the near future?
“Mortgage rates and financing in general will remain favorable towards buyers, and coupled with improved inventory, I do see the market skewing more in favor of buyers,” said Ragiu. “Homebuyers next year are going to find a much more normal market.”