The fall months typically mean a cooldown in real estate transactions, but this year, with inventory low and demand high, prospective buyers are wondering whether they should wait to buy.
“It’s been hard to make predictions based on regular market patterns,” said Ruthie Ravenel of Daniel Ravenel Sotheby’s International Realty in Charleston, South Carolina. “Typically, we have a strong spring, and at the high end, the market heats up from September to October, then drops off during the holidays. That just absolutely did not happen last year.”
The Covid-19 pandemic is continuing to influence buyers’ decisions, particularly for those who are now working remotely and, as a result, are seeking out homes with more space in smaller, less crowded cities.
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In
Charleston
for instance, median home prices jumped from $300,000 to $357,000 from 2020 to 2021, and tight inventory means that houses are going into contract quickly, sometimes within 24 hours of being listed. Buyers making cash offers and waiving contingencies have the upper hand.
The situation is similar in many other cities that have grown in appeal during the pandemic, like Denver, where home sales have totaled more than $25.5 billion so far in 2021, an increase of 25% compared to this time in 2020.
Such rapid price appreciation may lead prospective buyers to wonder whether they should rent, rather than buy, in their desired markets, in the hopes that home values and competition will start to cool down this autumn or beyond.
But after the initial wave of home buying motivated by the pandemic, the pace of transactions is settling down, and price appreciation is not expected to escalate dramatically.
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“By spring 2022, prices will not have increased much—maybe by 1%, but nothing substantial,” said Daryl Fairweather, chief economist with Redfin. “So there’s no rush in terms of the price people might pay, but I do expect mortgage rates to be higher then, so if you’re financing, there are advantages to getting your mortgage rate locked in sooner rather than later.”
Another compelling reason to jump into the sales market is that finding a great rental at a discount is not as easy as it was earlier in the pandemic: Rental vacancies have sharply decreased and prices have increased in cities like
Denver
Prices won’t drop, but appreciation is starting to slow down slightly, so the best move may be to buy now.
“I’d recommend buying sooner rather than later, because home values are not dropping,” said Jon Larrance, owner of Corcoran Perry & Co., the Denver-based affiliate of Corcoran. “Even in our slow months this year, the average sales price was still higher than it was in last year’s high months. We’re seeing 20% appreciation year over year.”
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