The housing market has been hungry for inventory since last year. The result? Many buyers struggle to buy a home and take advantage of the low mortgage rates.
The stock has decreased, especially in the case of cheaper houses. But that's finally changing.
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More and more affordable houses are coming onto the market
Redfin reports that in the second quarter of 2021, the number of properties for sale in the cheapest price bracket – those with an average price of $ 108,000 – increased 11.3% year over year. If we compare that to luxury real estate, which has an average price of $ 1.03 million, there is a huge loophole. The supply of luxury real estate increased by only 1.3% compared to the previous year.
This is how all apartment categories have developed compared to the previous year:
Why the sudden upward trend in cheaper houses? One big reason could be homeowners trying to discharge their homes as mortgage forbearance comes to an end.
Homeowners in financial difficulties were allowed to defer their mortgages under the CARES Act, the massive coronavirus relief act that came into force in March 2020. During the deferral, borrowers can suspend their payments without being considered overdue.
Those who have tolerated loans under the CARES Act can suspend payments for 18 months, so borrowers who took this route at the start of the pandemic will soon be nearing the end of the forbearance. Meanwhile, home values have risen at the national level. Hence, now is a good time for borrowers who are still struggling to pay their mortgages to sell their homes for enough money to fully meet their loan balances and go clean.
More options for buyers
The fact that inventory has increased at the lower end of the housing market is good news for home buyers – especially first-time buyers on a budget. In fact, this shift could allow more people to buy a starter home.
Starter homes are a great way to get started with your own home. They are usually smaller and cheaper to maintain. They also tend to have lower property taxes. It is common for new home buyers to buy a starter home and then move up to a larger property.
Right now, mortgage rates are near all-time lows, so it's a good time to buy a starter home. In contrast, those looking for a mid-range property that could potentially serve as a permanent home may continue to struggle due to a lack of inventory.
As the year progresses, there may be more homes in different price ranges. And since mortgage rates are likely to remain low for a long time to come, buyers shouldn't give up trying to take advantage of them.
source https://seapointrealtors.com/2021/08/07/more-lower-cost-homes-are-hitting-the-market-heres-what-buyers-should-know/
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