Despite talk of a coming recession, national trends in home inventory and low mortgage rates might be the perfect storm for bidding wars to come.
According to Yahoo! Finance, a coming inventory shortage will mean bidding wars over the available homes.
Despite a spike in May, home sales have been lagging, possibly indicating a market drop in the months ahead. However, home prices remain high due to a slow down in inventory growth. The growth in number of homes available for sale is down from the first quarter of 2019 high of 6% to just under 3% in May.
Mortgage rates alone have not sparked buyers because they continue to decline. Current 30-year fixed mortgage rates are down 3.91%, but still half a point higher than the historic 2012 lows.
“As long as mortgage rates are moving down there’s really no urgency on the part of buyers,” Realtor.com chief economist Danielle Hale told Yahoo! ‘First Trade’ in the video below:
Source: Yahoo! Finance
If mortgage rates level out, buyers will no longer see waiting around as a viable option, especially if there is a shortage of homes on the market. This potential combination could trigger bidding wars and competition among buyers down the road.
The Bottom Line
Hale doesn’t think we will see a dramatic increase in median home prices, only because prices already sit so high in many markets. However, it is possible we will see an increase in starter home prices, as overhead construction costs continue to rise and starter homes generally attract more motivated buyers.
“Be patient,” Hale advises home buyers, “but take advantage of those mortgage rates that are definitely low right now.”
Having a knowledgeable and experienced real estate broker on your side helps protect your interests and ensure you make the best possible decisions. We are dedicated to keeping on top of the real estate market and keeping you informed of changes. You can rest easily knowing you made a well-informed decision based on experience and insight into the Concord California market.