We’ve seen many ups and downs lately, especially in the housing market. The housing market can be affected by various factors. For instance, the COVID-19 outbreak has caused many problems in the housing market. In the country, nearly every market has experienced a shortage of supply.
In most markets, home buyers have to offer more than the asking price to consider their offers. Although the pandemic has affected the housing market in the US, the good news about this situation is that it won’t happen again in the near term.
Younger Generations Are Buying Instead of Renting
The high demand for starter homes is a good sign that the real estate industry is recovering from its recent slump. Due to the lackluster housing market, first-time home buyers and young individuals usually prefer to rent rather than purchase. But, if the market is strong, they’ll feel more confident about buying smaller houses or condominiums.
This leads to increased competition for starter homes, which typically go under contract in a short period during a healthy market. Homes with the right price tags can sell quickly once the economy improves.
Asking Prices Have Been Going Up
In a healthy market, home prices tend to increase because the demand for housing increases. However, in a weak market, they can stay flat. In most cases, the asking prices go up rapidly during a healthy market as more people come looking for houses.
The rising asking prices allow sellers to capitalize on the demand for homes. In a healthy market, home prices will continue to increase steadily. However, if they suddenly decrease or increase rapidly, this could signify the market’s less healthy state.
Mortgage Rates Are Good
Another sign that the housing market is in a healthy condition is mortgage rates. When the market starts to decline, lenders increase their interest rates to recover the losses from the various issues that have affected the market, such as distressed properties and short sales.
When the housing market is strong, home buyers tend to make larger down payments and carry better borrowing profiles, lowering lenders’ default risk. This helps stimulate the overall housing market by allowing more people to take advantage of low-interest rates.
Real Estate Companies Are Hiring
If real estate companies are hiring, this could signify that the market is healthy. Sellers and buyers need help from real estate agents, which is why they will hire more people to meet the increasing demand. The opportunity to make large commissions also attracts new agents, which is a good sign that the market is thriving.
Unfortunately, when the housing market starts to decline, many real estate agents are forced to give up on their careers. They usually earn most of their income from commissions when selling or buying homes.