Was the real estate market too good to be true this year?
By Thomas Haught
So, you’ve tried to bid on a new home earlier this year, only to have it snatched from you during a bidding war? Did you see that the asking price, or even a higher bid, won over that dream home?
You weren’t alone. But that hot real estate market likely won’t last much longer, especially in Illinois.
As the COVID-19 pandemic eases with the use of vaccines and the economy begins to rebound nationwide, consumers who are searching for homes likely won’t have to do battle on the real estate front for much longer.
We expect this winter to be more like a customary winter – pre-COVID – where the real estate market will slow down for a couple of months. Potential home buyers generally don’t look to move in the cold weather or around the holidays. If mortgage interest rates don’t take a major dip again, things will likely level off and then pick back up in the Spring.
Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) at the University of Illinois, provides real estate forecasts to the Illinois Realtors, one of the state’s largest trade associations, and said we likely will see the usual end-of-the-year decline in sales volume.
“This happens almost every year and price changes will probably mute a little. They will still be positive, but they will not be as large as they have been in the early and mid-part of 2021,” Hewings said to the association.
Also, Hewings believes that while demand is high with low interest rates for mortgages, about half of that demand was from current homeowners seeking to refinance.
But now there will be an extra incentive for those looking to buy a home.
Fannie Mae recently announced “that in any underwriting decisions in the future, they’re going to take into account an applicant’s rental history,” said Hewings. “And if they’ve had a very good history that will result in them getting much higher ratings. So, this is a real incentive to attract more people, in particular rentals, into a market which is already suffering from very, very tight inventory.”
If you are considering the purchase of a new home in the future, contact the lawyers at Gaudi & Haught to help provide professional assistance during the entire real estate closing process.