Millennial home buyers on the rise in 2021
In the first half of 2021, we saw a surging demand from millennials starting families and planning to buy a home.
We know that millions of millennials were looking to buy a home from 2022 to 2025, but decided to make the move earlier than their original home buying timeline and started the process now.
I mean, with interest rates as low as they are, can you blame them? On top pf that, the rental market increased in rental prices more than the housing market did in equity. The demand for rental properties and lack of rental inventory also helped prompt these homebuyers to start the search faster when they did the math and realized it was more affordable to buy a home than rent, if in fact they can get into a house, again also due to inventory shortage.
This also happened during what is typically the hottest season for home buying in general so it made the surge even more obvious.
Where we are now
Heading into the fall, we usually see prices drop and the market slow down, but that hasn’t been the case. Buyers are disappointed to see that while prices have stabilized a bit, there are still multiple offers on homes and still going above asking.
Wise sellers are pricing the homes competitively to drive more buyers to submit offers, while we’ve seen other sellers overprice their homes only to see it stay stagnant in this market and have to drop their prices until they do in fact get an offer. By then, buyers think there is something wrong with the home when it’s been on the market over 3 weeks.
In the Oviedo market, a home doesn’t last longer than 7 days on the market.
Buyers waiting for the market to change
While the enthusiasm of those who have been shopping for a new home for awhile might fade, and we have definitely experienced buyer fatigue in this market, there are still tons of new buyers entering the market with down payments and closing costs ready to compete.
I’ve spoken to many prospective buyers that are waiting for a dip or a drop in the market and while I’m hopeful for them, the interest rates will go up if market prices dip. If that’s the case, home buyers will be spending more for a home due to the higher interest rate than locking into a home a little bit of a higher price with the low interest rates available right now.
The market shift people are waiting for isn’t what they think. Instead of a surge in prices, we’re going to see a stabilization of prices. Inventory isn’t coming quick enough through new construction and people that own houses don’t want to move unless they absolutely have to.
That has placed us where we are with low inventory, high demand, but the benefit of a low interest rate that continues to be the light at the end of this search for home buyers.
We don’t anticipate a full switch in the housing market until sometime in 2022 where it would be considered favoring buyers, but even if that is the case, it doesn’t guarantee locking in a low interest rate.
Most of us real estate professionals consistently predict the same thing. If the market softens next year, it’s just stabilizing, not dropping. We’re going to be in recovery mode for many years and until new construction and inventory opportunities open up in high demand markets, it’s not really going to change too drastically.
It is good to point out that while most major cities and suburban markets, especially in Texas, Florida and Tennessee have seen significant price appreciation due to COVID and relocations, some other major cities have had serious issues trying to sell, like New York, but people are slowly making their way back to the Big Apple.
While the real estate market has largely been hot across the U.S., local market conditions vary and will continue to do so. If you’re planning to buy or sell a property this year, give me a call so we can let you know what’s going on at a hyperlocal level.
For more questions on the market information in Orlando, Oviedo or surrounding areas, contact us at 407.801.9914.
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