This year’s housing market has been high-stakes. Prices skyrocketed, bidding wars were rampant and, thanks to remote work, demand was strong in virtually every market across the U.S. It was a challenging landscape for buyers, to say the least.
But just as the weather has started to cool (a welcome reprieve here in Texas), it seems housing has started to chill as well.
To be clear: That doesn’t mean a buyer’s market is in the cards — nor is there any indication prices will start to decrease any time soon. What the data does point to, however, is a slightly more manageable market than buyers have seen so far this year.
“The housing market has absolutely cooled from where it was this past winter and spring,” says Greg Aponte, head of business intelligence and data science at real estate platform Orchard. “It’s not completely cool — just cooler from what it once was.”
What does that mean if you’re eyeing a home purchase this winter or into 2022? Here’s what you can expect.
1. Slower home price appreciation
Home prices have increased at breakneck speeds over the last year. In April, Realtor.com data showed prices on active home listings up a whopping 17.2% compared to a year prior. In October, that bump declined considerably, falling to just 8.6%.
Fortunately, experts predict that slower growth will continue as we head into 2022. According to data firm CoreLogic, annual price growth should slow to 2% by next September. Other organizations, including mortgage purchaser Freddie Mac and the Mortgage Bankers Association, predict total 2022 price increases in the 5% to 7% range.
“When looking at those figures, it’s easy to say that it’s cooling down, but that simply indicates that we’re heading into a much healthier housing market,” says Marcus Larrea, broker associate at Palm Paradise Real Estate in Florida. “A healthy, balanced market typically sees appreciation of approximately 3% each year.”
Another good sign is that price cuts — or the number of active listings seeing price reductions before selling — have increased for the last three months. The share of listings with price reductions is now at 2016 levels, according to Realtor.com data.
2. More affordable listings
Starter home listings have seen a much-needed rise in the back half of this year, and according to real estate brokerage Redfin, new listings in the “most affordable” bucket — those with a median price of $126,500 — increased 32% between the third quarter of 2020 and that of 2021. Those in the “affordable” category, with a median price of $210,000, rose 16%.
According to Redfin’s analysis, much of this has to do with mortgage forbearance plans ending for many homeowners. Forbearance was an option offered to struggling homeowners under …….