Ask the typical buyer who was looking for a home this year and you will likely hear that it was absolutely impossible to break into the real estate market. For months Housing stock was extremely lowand that combined with low mortgage rates has created a lot of competition. This, in turn, has caused home prices to skyrocket, leaving buyers with no choice but to either get stuck, save, or go much higher Mortgages than you want.
But it’s not just that regular buyers compete for homes. You also have to deal with real estate investors – people who buy houses not to use, but rather to rent to tenants over the long term or short term.
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Investors take inventory
In the second quarter of 2021, real estate investors bought 67,943 homes, according to Redfin. This is an increase from 59,017 apartments in the first quarter and 32,873 in the previous year.
Real estate investors often have the advantage of having access to more money than regular buyers (especially since they usually have equity from their existing homes, or the ability to do so). refinance their existing mortgages and withdraw cash from their properties to build new homes). The result? You can bid higher and have the flexibility to pay more when houses get into bidding wars.
Now the good news is that Housing stock has increased slightly in June. Realtor.com reports that new listings increased 5.5% from June 2020 and 10.9% from May. But there is still a huge shortage of available homes compared to the number of people looking to buy one. And that, combined with increased competition from investors, has made it very difficult for the average buyer.
Is it worth waiting to buy?
The typical buyer trying to buy a home in the near future is likely to face limited choices, fierce competition, and inflated prices. As such, it could be beneficial for buyers to hold off their home hunting for at least a few more months and see if more inventory is added. In fact, some buyers may want to wait until 2022 to start looking again.
Of course, as soon as there are more homes to choose from for both regular buyers and investors, prices should fall as supply catches up with demand. But that’s unlikely to happen very soon, and it may not happen before the end of the year.
The good news is that Mortgage rates are likely to remain low until well into 2022 and possibly for the whole year. This means that stuck buyers today don’t have to worry about missing out on an opportunity to get an affordable home loan. While today Mortgage rates can be low, home prices are far from different, and buyers who choose to wait could save themselves some cash.