Whether you’re searching for a home as a potential buyer, are thinking about listing your home for sale, or you simply pay attention to residential real estate trends, you probably know that the residential housing market has been hot for the past 18 months or so. Even before the COVID-19 pandemic struck, housing supply nationwide was relatively low; when the pandemic hit and cities and states enforced lockdowns, the supply diminished even more.
While housing supply has been part of the problem, it’s not the only one: the Federal Reserve has kept interest rates low—something that traditionally attracts buyers and helps to stimulate sales—and residential home prices have soared. Typically, in the fall, the market cools off as families with children prepare for back to school and everyone gets ready for the holidays. Will the same be true this year? Is the residential housing market finally cooling off?
Housing Market Trends Over the Past 18+ Months
An article published in The Washington Post analyzed the housing market and residential real estate trends in 2020/2021 in the Washington DC area. Consistent with trends in other major cities throughout the U.S., prices in the residential real estate market in the DC area remained sky-high through this past summer (2021) after a hectic housing demand crunch in 2020.
In fact, in June of 2021, the median home price in DC reached $700,000—the first time the median home price has ever been so high. That same month, the average home for sale closed at just over 100 percent of its listing price.
The competitive market has led to many buyers making offers that are well over listing price; as explained by one real estate team that works in the Greater Washington DC area, sometimes, homes go for hundreds of thousands of dollars over asking price; it’s also not uncommon for a single home for sale to garner dozens of offers.
Things weren’t much different for the Baltimore real estate market. Rising home prices, fewer homes on the market, and consumer jitters contributed to a record home sale pace during the summer in the area.
What Are the Numbers Doing Now?
While the market is still hot, September and October numbers seem to suggest that the market is cooling off. The number of listings that went under contract in September 2021 was down nearly four percent compared to August 2021; the median amount of time that a home for sale spent on the market also increased slightly for September compared to August. There was also a slight decrease in the median sale price. Another good sign is that while the number of homes for sales remains low, new listings increased by about 15 percent in September 2021.
What to Expect from the Residential Housing Market in the Future
While it’s likely that home prices in the Washington DC and Baltimore metro areas will remain high, it does appear that the market is cooling off. One expert says it’s likely that price growth will fall throughout the end of the year, but that inventory isn’t likely to fully recover until next spring (2022). Interest rates, which have been sitting at a record low, should also increase, which will help to douse the flames on a fiery market and slow demand.
Tips for Buying a House in Today’s Market
If you’re a potential buyer, one of the best things that you can do to prepare for a cooling residential housing market is to get your finances in order now. If a deal does come along and you don’t have your finances ready to go, you could miss out.
Don’t want to wait for things to cool off? If you’re ready to buy now, it is still possible to purchase a home in the DC-Baltimore area, even while demand and prices remain elevated. Some tips for navigating the residential real estate market as a buyer include:
- Work with a trusted lender who can help you to understand the true costs of buying a home
- Get all your finances in order as soon as possible
- Take comfort in the record-low interest rates
- Be prepared to offer a higher-than-normal earnest money deposit, down payment, or both
- Know that there’s little room for negotiations from the buyer’s side right now
- Do your due diligence—don’t waive things like a title check and home inspection
Contact United Title Company for All of Your Title Services
At United Title Company, we provide a range of residential real estate services, including title services, purchase agreement services, escrow services, and more. To learn more about how we can help you during a residential real estate transaction, reach out to our team by phone today at (410) 544-5441. You can also fill out the contact form on our website.