New US Realtors Pile Into Hot Housing Market, Here's What to Expect

• The average rate on a 30 year, fixed-rate mortgage is approximately 2.74%; this was over 3.5% the year before and over 4.7% a decade prior.
• U.S. housing prices have been rising for a while (even before the COVID-19 market boom). Between 2020, home prices spiked by roughly 11%.
• U.S. property owners have seen record levels of equity in their properties. Between Q3 2019 and Q3 2020, homeowner equity proliferated by $1 trillion, and the total number of properties that have negative equity dropped to a marginal 3%.

The COVID-19 pandemic has indubitably reshaped the state of the U.S. real estate market quite drastically. The U.K did not fare too bad either. With unprecedented house price spikes, people currently interested in purchasing a home are likely eager to learn exactly how long this trend will last.

Recent data from June 2021 has shown that home prices across the U.S. increased by roughly 25% year-over-year to an average sale price of approximately USD $386,000. Mortgage rates have also reached record lows- continuing to decline as of July 2021. For contextual purposes, the 30-year fixed-rate for a mortgage was 3.02% in late June, a figure which dropped to 2.78% by late (22) July.

This is because certain protective measures introduced by the government to counteract the catastrophic effects of the deadly virus have provided a ''blanket of economic security'' for individuals, meaning that they now feel more comfortable purchasing homes- increasing demand and propelling prices significantly.

Of course, the effects of the COVID-19 pandemic are far from over, and- realistically speaking, only time will tell to what extent the ''hot housing market'' is actually cooling off.

2021 Market Projections

Having said that, several realtors and market experts have recently shed some light on this topic, explaining what the market will likely look like for the rest of 2021 according to their projections.

Certain experts believe that the aforementioned spike that was seen was merely an inevitable result of a ''millennial reshuffling''. This means that millions of older millennials- who have already created families and who were already planning to purchase a home between 2022 and 2025, found themselves in a position where this was practically feasible at an earlier date.

Consequently, a prolific number of individuals decided to make a move earlier, and did not follow their original timeline for buying a property.

This meant that the rental market saw a 100% increase in the number of individuals moving to become homeowners or change jobs.

With increased opportunities in the market, built up demand that had been piling up for a plethora of years was finally unleashed- creating the aforementioned boom in the housing market (not only in the United States, but in most developed countries in the world- including the Netherlands, Finland, and Germany.

This effect was further propelled by the fact that it happened during the ''hottest'' season of homebuying. Currently, we are slowly moving towards the conventionally slower months, and buying activity has already begun to slow down significantly- with some experts commenting that this may be indicative of the beginning of the end of the boom.

At the moment, total sales are also likely stagnating as a result of the exorbitantly high prices, with many buyers likely for the return of ''normality'' before re-engaging with the housing industry.

Inventory numbers are also beginning to increase for the first time in several months, but this is unlikely to lead to a significant fall in house prices according to market experts- at least not for quite a while (April 2022).

This is because, whilst individuals who have been in the market for a long time are beginning to lose their enthusiasm, the housing industry continues to attract a very large amount of new buyers on a regular basis.

This has also made it an extremely profitable time for real estate agents, with real estate licence course providers' popularity skyrocketing within the last year or so.

Effects of Delta Variant: Future Projections?

According to field analysts, if the COVID-19 Delta variant leads to further restrictive measures and lockdowns (which seems rather unlikely at the moment), the real estate industry is very likely to experience a very similar ''booming'' trend to the one that was seen with the previous lockdowns.

By mid-fall, mortgage rates are expected to slightly increase (to 3.5% approximately), and mild increases in the total housing inventory (which has reached lows that have not been seen for over 15 years) are likely to continue systematically until the end of 2021.

As briefly touched on above, however, a full ''recovery'' is not anticipated until mid 2022 (April), where it will likely go back to favouring individual buyers rather than property sellers and real estate agents.

Final Words

The COVID-19 effect on the housing market was quite surprising, particularly when considering that, traditionally, seasons of chaos, uncertainty, and economic downfall have always been associated with housing market crashes (whereas the opposite was seen in this case).

Obviously, the exact time that it will take the housing market to return to its ''normal'' state cannot be predicted, as only time will tell, but recent government data would suggest that this has already started happening.

The aforementioned housing market chaos was also not experienced in every U.S. city; this depended heavily on the type of area (suburban or rural), with the former experiencing significant price appreciation in comparison to the latter.