Home Buying Demand Increases
The real estate market tends to perform the best between March and July. This is typically why sellers wait to list their homes until the spring, so they can maximize profit and get in front of the most people possible. While sellers may be waiting for the right time, buyers are not. Homebuyers are not waiting to buy their homes, especially with price and rate increases coming into 2022. Demand is extremely high and has been for over two years now. A lot of this demand is from buyers trying to beat the soaring mortgage rates. Buyers are more eager to move now more than ever, even though buyer sentiment is at an all-time low. Here is why home buying demand looks to increase.
Data On Home Buyers
According to the most recent Consumer Confidence Survey, the percentage of people surveyed are looking to buy in the next six months has increased. On a month-to-month basis, the number of people planning to buy has increased every month. Because of mortgage rates increasing, more people are being influenced to buy while it is still affordable. Not only are people trying to beat mortgage rates, but they are also trying to find a home. A lot of these buyers have been competing for limited supply, which will hopefully increase in the spring months.
If you look at the graph above, it shows that consumers are speeding up their plans to buy a home. Over the past three months, more consumers surveyed are looking to buy their homes to beat the increase in costs. Buyers are reevaluating their plans to buy, and because of this, buyers are acting sooner. Not only are buyers looking to speed up their plans to purchase, but sellers may be looking to take advantage of the excess demand to go ahead an list their homes.
Home Buying Demand Due To New Plans
While more people continue to move up their plans, others are actually starting the process. The process starts when applying for pre-approval or starting the mortgage process. Time on the market is a great indicator that is used by real estate professionals to gauge demand and supply. When homes are on the market for as little as 20 days in the Louisville, Kentucky market, it shows strong demand and low supply. According to realtor.com, the average home sold faster in January 2022 than they have in any other January in history. Existing home sales ticked up, even with record low supply. Danielle Hale, the Chief Economist at realtor.com, says:
“Homes sold at a record-fast January pace, suggesting that buyers are more active than usual for this time of year.”
This means that homebuyers are rethinking their home buyer strategy, and accelerating their plans to move forward. There are a few reasons for this, mostly because of increasing mortgage rates, home prices, and inflation. That means demand for homes is at a record high, and that does not look to slow anytime soon. Buyer demand has exceeded supply for years, dating back to 2018. The real estate market has only gotten tighter since the pre-pandemic days.
What More Home Buying Demand Means
Because there is such little supply for homes available, buyers are limited to what they can actually buy. For sellers, this is the time to sell, as you will have your property in front of the most eyes possible. This year will be the epitome of a seller’s market, and that will probably last into the future until the Federal Reserve derails the recovery by moving too much, too fast. We are all hoping for a listing boom come the spring months, however, with home buyer demand increasing in 2022, this may not matter. Who knows when we will see a time that actually features enough homes on the market to be considered a buyers market. The market inventory is 1.8 months nationally, and a seller’s market is indicated at anything less than 6. Home buyer demand will increase, and we will see if buyers are shaken out.