House shoppers want to know, “Why are housing prices rising so fast?”
The answer to this question is that the country is 10 million houses behind national demand. What this means is that builders would need to keep pace with the normal rate of builds per month plus an extra million houses to catch up.
With everyone holding stimmy checks, tax returns, PPP loans, and other pandemic loot, people have money on hand and are trying to upgrade their homes.
In West Chester, PA, Steve Laret, a real estate professional, exclaimed that real estate sales are going through the roof.
In an article, Laret told the reporter, “Buyers are bringing all cash to the table, and appraisals are guaranteed.”
He went on to reveal, “I really don't believe (the seller's market) will end for homes under $750,000 in and around Chester County. The factors that led to the real estate bubble in 2006 are pointing in the exact opposite direction today. Then, it was based on inflated appraisals. Now, it's people bringing in money they have worked so hard to save, and bringing in a briefcase full of cash to settlement. All of this happened organically."
Where’s the Market Going From Here?
Chief Economist with the National Association of Realtors, Lawrence Yun, believes mortgage rates will continue as they have been in 2021 – remain low. He thinks there is the potential for a slight increase from the all-time low of 2.65% we saw in the earlier part of 2021 for 30-year, fixed-rate mortgages.
He said, “In 2021, I think rates will be similar or modestly higher, maybe 3%. So mortgage rates will continue to be historically favorable.”
Bankrate’s chief financial analyst, Greg McBride, CFA, added, “As long as the economic expectations pan out – meaning a strong rebound and an increase in inflation – the risk will be to the upside. “But with a much slower growth pace expected in 2022, that might trigger a pullback at some point in the second half of this year. Either way, I expect rates to remain in the 3 percent to 3.5 percent range for most of 2021.”
Make a Move: Refinance or Finance
More than likely, mortgage rates won’t drop any lower than they already are right now. So, if you can, it’s as good a time as ever to make a move and buy a home. The down side is that house prices are somewhat inflated because of this lack of inventory and high demand from buyers.
Still, with mortgage rates so low, this is the best time to purchase a home.
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