If you were in the market to purchase a home during the summer months of 2021 then you probably have firsthand experience with bidding wars. A continued tight inventory of homes for sale combined with increased buyer demand resulted in a record level of bidding wars for homes. Needless to say, this has turned off many first-time home buyers and they are now stepping away from the market due to the lack of affordable homes for sale. With this said, we are beginning to see the typical seasonal trends in the market as demand is cooling off.
Less competition in the market
For those home buyers that may have halted their home search, now may be an opportune time to resume it. The reason for this is twofold:
- #1. More inventory of homes for sale
- #2. Less competition from other buyers
As we enter the fall months, we are beginning to see an improving home inventory and less buyer demand. These trends are underscored by the decrease in average number of offers per home sold. During the month of May there were approximately 5.8 offers for every home sold. As of August, the average number of offers for every home sold dropped to 3.8. For perspective, the average number of offers for every home sold during the pre-pandemic era was 2-3 offers per home sold.
Less first-time home buyers in the market
The share of first-time buyers to the total existing-home sales market declined to 29% in August 2021 from 33% in the same month in 2020. The most common reasons cited for first-time home buyers exiting the market are as follows:
- Less affordable homes for sale
- Difficulty with meeting down payment requirements
- Increased competition from cash buyers
Summary
Looking ahead, it is largely expected that bidding wars for homes will continue to cool off. In addition, we expect the inventory of homes for sale to continue to gradually improve as well. Lastly, the National Association of REALTORS® (NAR) forecasts the 30-year fixed mortgage rate to rise from 3% in 2021 to 3.6% in 2022. This should result in the further cooling off of buyer demand in the market as affordability will also decrease. Whether home prices will plateau or pull back slightly is yet to be seen.
At Live South Florida Realty, Inc. we have assisted many clients build their real estate investment portfolios. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!
