The latest housing market forecast is in, and it's mixed news for potential property buyers as home prices continue to climb amid exceptional demand. In the meantime, the number of for sale listings is continuing to dwindle as wary homeowners choose not to put up their homes for sale.
As of the week ending Fenryary 7th, US home prices increased 15 percent year over year, while the number of for sale listings was down 37 percent year over year. It may seem surprising that existing homeowners are not taking advantage of a profitable housing market, but even the current strong growth doesn't seem worth to the many homeowners who don't believe they'd win a bidding war for their next home even with the extra money from the sale of their current one.
According to Redfin Chief Economist Daryl Fairweather, 'homeowners are reluctant to sell, because it’s so hard to buy again unless you are moving to a less expensive area where you can afford to outbid other buyers.'
Despite the increase in migratory patterns from expensive coastal areas to cheaper inland ones, not everyone is prepared to make a drastic move away from their current metropolitan area, and existing homeowners are increasingly having to compete with the influx of buyers from wealthier areas. Homeowners deciding to stay local are finding themselves at a disadvantage, with many nervous about not finding a new home quickly enough after selling.
However, according to Zillow, market confidence is on the rise: 'While the overall share of respondents saying it’s a good time to sell (57 percent) is still short of the pre-pandemic levels, the strong one-month increase in seller sentiment suggests homeowners are responding to rapidly-growing prices and may be gearing up to list their home for sale in coming months.'
While it is difficult to make a decision about whether to hold off looking for a house based on prediction and sentiment rather than hard figures, buyers who have the time to wait should do so – or use their flexibility as an advantage when negotiating with sellers who have put their homes up for sale. Daryl Fairweather concludes: 'Sellers who are concerned about finding their next home are asking buyers for a rent-back agreement, which allows the seller to stay in the home until they can move into their next one. Offering a rent-back agreement can also be a winning strategy for buyers with flexible timelines.'