What Do Experts See on the Horizon for the Second Half of the Year?

What Do Experts See on the Horizon for the Second Half of the Year? | MyKCM

As we move into the latter half of the year, questions about what’s to come are top of mind for buyers and sellers. Near record-low mortgage rates coupled with rising home price appreciation kicked off a robust housing market in the first half of 2021, but what does the forecast tell us about what’s on the horizon?

Mortgage Rates Will Likely Increase, but Remain Low

Many experts are projecting a rise in interest rates. The latest Quarterly Forecast from Freddie Mac states:

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”

However, even as mortgage rates rise, the anticipated increase is expected to be modest at most, and still well below historical averages. Rates remaining low is good news for homebuyers who are looking to maximize their purchasing power. The same report from Freddie Mac goes on to say:

“While higher mortgage rates will help slow the pace of home sales and moderate house price growth, we expect overall housing market activity will remain robust. Our forecast has total home sales, the sum of new and existing home sales, at 7.1 million in 2021….”

Home Price Appreciation Will Continue, but Price Growth Will Likely Slow

Joe Seydl, Senior Markets Economist at J.P. Morgan, projects home prices to continue rising as well, indicating buyers interested in purchasing a home should do so sooner rather than later. Waiting for rates or home prices to fall may not be wise:

“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”

Other experts remain optimistic about home prices, too. The graph below highlights 2021 home price forecasts from multiple industry leaders:

What Do Experts See on the Horizon for the Second Half of the Year? | MyKCM

Inventory Remains a Challenge, but There’s Reason To Be Optimistic

Home prices are rising, but they should moderate as more housing inventory comes to market. George Ratiu, Senior Economist at realtor.com, notes there are signs that we may see the current inventory challenges lessen, slowing the fast-paced home price appreciation and creating more choices for buyers:

We have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.”

New home starts are also showing signs of improvement, which further bolsters hopes of more options coming to market. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), writes:

“As an indicator of the economic impact of housing, there are now 652,000 single-family homes under construction. This is 28% higher than a year ago.”

Finally, while it may not fundamentally change the market conditions we’re currently experiencing, another reason to be optimistic more homes might come to market: our improving economy. Mark Fleming, Chief Economist at First American, notes:

“A growing economy in the summer months has multiple implications for the housing market. Growing consumer confidence, a stronger labor market, and higher wages bode well for housing demand. While a growing economy and improving public health conditions may also spur hesitant existing owners to list their homes for sale, it’s unlikely to significantly ease the super sellers’ market conditions.

Bottom Line

As we look at the forecast for prices, interest rates, inventory, and home sales, experts remain optimistic about what’s on the horizon for the second half of 2021.

Let’s connect today to discuss how we can navigate the market together in the coming months. (703) 242-3975 | Info@TheBeltTeam.com

9944-A Corsica St, Vienna VA 22181 – Just Listed by The Belt Team!

Price and Features: 9944-A Corsica St, Vienna VA 22181

Welcome to 9944-A Corsica St, Vienna VA 22181…a gorgeous, updated and well maintained brick front colonial in a fabulous Vienna location. Sited on a 1/2 area lot with lush landscaping, this 5BR/4.5BA home has an open floor plan and special architectural details including lovely hardwood floors throughout the main level, extra wide crown molding, box molding, bay windows, window transoms and more. The main level features an eat-in kitchen with island/breakfast bar, gas cooking & double ovens, a family room off of the kitchen with gas fireplace & access to the second staircase to the upper level, a formal dining room & living room and private den/study with built-in shelves & cabinetry below. The spacious primary owners suite features a large walk-in closet, vaulted ceiling and a spa-like attached bath with double sinks, soaking tub, walk-in shower and beautiful custom tile. The walkout lower level provides a great versatile living space with rec room, the 5th bedroom/exercise room (with custom climbing wall), office/work area, custom climate-controlled wine cellar and a bonus room ideal as a craft room/workshop/storage room! Enjoy the natural surroundings on the back deck or flagstone patio with benches. This home also has a 3-car attached garage. So much to offer in an unbeatable location…convenient to several commuter options, close to many amenities and in the Madison High School pyramid!  

Call Terry Belt at (703) 242-3975 for more details or to schedule a showing!

Call The Belt Team at (703) 242-3975 if you are thinking of buying or selling. The Belt Team has been in business for over 50 years and has sold over $1 Billion in transaction volume! (Sellers –  you’ll be interested to know that Belt Team Sellers sell FASTER and for MORE money than average!

Hope is on the Horizon for Today’s Housing Shortage

Hope Is on the Horizon for Today’s Housing Shortage | MyKCM

The major challenge in today’s housing market is that there are more buyers looking to purchase than there are homes available to buy. Simply put, supply can’t keep up with demand. A normal market has a 6-month supply of homes for sale. Anything over that indicates it’s a buyers’ market, but an inventory level below that threshold means we’re in a sellers’ market. Today’s inventory level sits far below the norm.

According to the Existing Home Sales Report from the National Association of Realtors (NAR):

“Total housing inventory at the end of April amounted to 1.16 million units, up 10.5% from March’s inventory and down 20.5% from one year ago (1.46 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, slightly up from March’s 2.1-month supply and down from the 4.0-month supply recorded in April 2020. These numbers continue to represent near-record lows.”

Basically, while we are seeing some improvement, we’re still at near-record lows for housing inventory (as shown in the graph below). Here’s why. Since the pandemic began, sellers have been cautious when it comes to putting their homes on the market. At the same time that fewer people are listing their homes, more and more people are trying to buy them thanks to today’s low mortgage rates. The influx of buyers aiming to capitalize on those rates are purchasing this limited supply of homes as quickly as they’re coming to market.

Hope Is on the Horizon for Today’s Housing Shortage | MyKCM

This inventory shortage doesn’t just apply to existing homes that are already built. When it comes to new construction, builders are trying to do their part to bring more newly built homes into the market. However, due to challenges with things like lumber supply, they’re also not able to keep up with demand. In their Monthly New Residential Sales report, the United States Census Bureau states:

“The seasonally‐adjusted estimate of new houses for sale at the end of April was 316,000. This represents a supply of 4.4 months at the current sales rate.”

Hope Is on the Horizon for Today’s Housing Shortage | MyKCM

Sam Khater, Chief Economist at Freddie Mac, elaborates:

In the span of five decades, entry level construction fell from 418,000 units per year in the late 1970s to 65,000 in 2020.

While in 2020 only 65,000 entry-level homes were completed, there were 2.38 million first-time homebuyers that purchased homes. Not all renters looking to purchase their first home were in the market for entry-level homes, however, the large disparity illustrates the significant and rapidly widening gap between entry-level supply and demand.”

Despite today’s low inventory, there is hope on the horizon.

Regarding existing home sales, Sabrina Speianu, Senior Economic Research Analyst at realtor.com, explains:

“In May, newly listed homes grew by 5.4% on a year-over-year basis compared to the earlier days of the COVID-19 pandemic last year

In May, the share of newly listed homes compared to active daily inventory hit a historical high of 44.4%, 17.3 percentage points higher than last year and 15.1 percentage points above typical levels seen in 2017 to 2019. This is a reflection of quickly selling homes and, for buyers, it means that while they can expect fresh new listings every week, they will have to be prepared to move quickly on desirable homes.”

As for newly built homes, builders are also confident about what’s ahead for housing inventory. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), shares:

Builder confidence in the market remains strong due to a lack of resale inventory, low mortgage interest rates, and a growing demographic of prospective home buyers.” 

Things are starting to look up for residential real estate inventory. As the country continues to reopen, more houses are likely to be listed for sale. However, as long as buyer demand remains high, it will take time for the balance between supply and demand to truly neutralize.

Although it may be challenging to find a house to buy in today’s market, there is hope on the horizon. Contact The Belt Team to talk about your home search so we can find your dream home this summer. Let our 50+ years of real estate experience work for you!

703-242-3975 | Info@TheBeltTeam.com

Home Sale Statistics in Northern Virginia – May 2021

What is the Home Buyer Demand Index and what is it telling us about this hot Seller’s Market? Watch the video below as Terry explains this index and what it may be telling us about our housing market. Then see below for all of the market stats for May 2021 for the Region and links for hyper local areas.

It is still so critical to work with an experienced agent whether you are buying or selling.  The Belt Team has been in business for over 50 years and has the experience needed to navigate these waters.  So, if you are thinking of buying or selling, contact us NOW (703-242-3975).

Northern Virginia May 2021 home sales:

5,186 homes went under contract in the region. This is up 38% from the same time period in 2020.

81% of the homes that went to settlement in May 2021, sold in 10 days or less from when they hit the market.

• Average sold price was $679,976 (up 18% from the same time period in 2020).

5,862 homes came on the market. That’s up 49% from May 2020.

• Homes that sold (closed) averaged 10 days on market, 7 days faster than in May of 2020.

• There is currently a 0.8 month supply of homes (remember, in a balanced market – the demand from buyers equals the supply from sellers – there is a 5-6 months supply) in the Northern Virginia – and 2,997 homes for sale (townhouse, condo and single-family).

OVERALL: Northern Virginia remained an aggressive Seller’s Market. We didn’t see a significant change in the numbers from April to May, but activity and average sold price were up double digits compared to this time last year (again, expected due to the pandemic).  And low inventory levels remained an issue throughout the region.

To see what the conditions are like in your community, click on the link to your desired city below! 

Vienna: May 2021 Home Sales

Oakton: May 2021 Home Sales 

McLean: May 2021 Home Sales 

Great Falls: May 2021 Home Sales 

Reston: May 2021 Home Sales 

Falls Church: May 2021 Home Sales 

Arlington: May 2021 Home Sales 

Alexandria: May 2021 Home Sales  

*Data compiled from SmartCharts, MarketStats by ShowingTime, whose data comes directly from the Multiple Listing Service (MLS).

Want to know what your home is worth? Click below to get our free instant home valuation!

5800 Hall St, Burke VA 22015 – Just Listed by The Belt Team!

Price, features and more photos: 5800 Hall St, Burke VA 22015!
 
Stunning colonial where curb appeal abounds with its full wrap around front porch. Beautifully sited on an over 1/2 acre lot with extensive professional landscaping and hardscaping, this 5BR/4.5BA enhanced home is ready to live in with over $450,000 in owner improvements/updates since the home was built including beautifully updated bathrooms, renovated wet bar in the lower level, updated tile floors, both AC units & hot water heater replaced, pre-wired audio in family and rec rooms, installation of decks, brick & stone patio and walkways, lush landscaping/hardscape & irrigation system, concrete driveway and more! The thoughtful designed property has an open floor plan and many striking details (multi-piece crown molding, curved staircase, bay windows with transoms) which create an added level of architectural interest. 
 
Call Terry Belt & The Belt Team for more details or to schedule a showing! 703-242-3975
 

Call The Belt Team at (703) 242-3975 if you are thinking of buying or selling. The Belt Team has been in business for over 50 years and has sold over $1 Billion in transaction volume! 

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