The consensus originally was that the spring real estate market would be a bit tamer than the last 6-12 months. After all, it couldn’t get much worse… could it? Unfortunately, ours as well as other industry professionals have shifted our position to the opposite side. Bidding wars are beginning to pick up again and this is beginning to look like it could be the hottest real estate spring in history.
How did this all happen? When we entered into the pandemic, real estate experts agreed that the housing market would enter a slump. With increasing fear of leaving your home, people would be opposed to selling and would take the time to actually spend money on their current home. They would not be going out anymore and would build up their savings accounts working from home and spending time with the family. However, mid way into 2020, we saw an intense real estate boom with millennials wanting to make the step forward and purchase, especially with mortgage rates reaching all time lows. Inventory then dried up and buyers had no choice but to offer over the asking price and offer more cash than ever before.
We had hoped that heading into 2022 inventory would rise, that more elderly people who were afraid to leave or sell their homes would become vaccinated and sell. Those exiting the government’s forbearance program were also expected to sell entering 2022. Inventory levels began to rise in the fall, however by November inventory began to sink again. Zillow tracks some 300+ housing markets and 254 out of the total had inventory’s that were down by at least 30%. Zillow predicted that at the start of the new year, home prices would go down by about 11%. However, we all know now that it is quite the opposite, with the average home going up 16.4% in January of 2022. With mortgage rates rising, that was supposed to cool off the housing market a bit. However, instead, it is making new homebuyers nervous and sending them right back into buy mode before the rates head further up.
With all of this in mind, many buyers are being pushed out of the market due to the rising rates as well as rising home values. As we mentioned in our last post, in order to qualify for a loan of the average value in Miami, the household must be making almost $100k / year. This is worrying due to the average median household income being much, much less.