Stable But Fluid

Stable But Fluid

WHY THE FLUCTUATING HOUSING MARKET STILL LEANS TOWARD SELLERS

By DREW WATERHOUSE, MODEL MATCH

After a turbulent 2020, it is oddly soothing to look ahead in 2021 at a housing market that appears, at least on the surface, to be relatively neutral and balanced, albeit incredibly fluid. Lack of inventory and the higher home prices that go along with it seem to suggest a seller’s market, but at the same time, historically low-interest rates for potential borrowers seem to suggest a buyer’s market.

So, which is it?

At this point, it is really a matter of when the transaction occurs, but even in what appears to be a balanced housing market, these types of scenarios still tend to tilt toward sellers. Here is why.

RIDING THE SEESAW

For homebuyers, the ability to get locked into a low rate right now is a great opportunity and a great idea. But at the same time, housing prices are extraordinarily high, so buyers are getting locked into a low rate, but the price is going to be a little bit higher than it should be until the housing market balances itself out. Either way, this dynamic tends to somewhat favor the seller because, thanks to the lower rates, buyers can borrow more and pay less interest over the life of the loan. However, as an example, they’re also far more likely to pay $1 million for a home that might only be worth about $800,000 in a more stable housing market.

TIMING IS EVERYTHING

At the beginning of this year when interest rates dropped dramatically, there was a significant rush on both new home purchases and refinance loans. Relatively early on, buyers had already jumped on most of the available inventory, but at the same time, in response to the pandemic, people who might have been thinking about selling decided instead to hunker down. Others, however, thought about moving to the suburbs in favor of more space as their homes also became offices and schools. So, between a housing inventory that was already low and that added uncertainty about the world in general, let alone the housing market, it all factors into both housing prices and interest rates. It’s all a matter of how soon and how aggressively the construction industry responds to the demand, and we’re starting to see a little bit of that already.

SOMETHING FOR EVERYONE

Whether it ultimately ends up benefitting buyers, sellers, or both, one undeniable and continuing benefit of the fluid housing market is that the mortgage industry has been and continues to be incredibly busy. When it comes to recruiting, sometimes those efforts get pushed back because it is almost always easier to fund another loan than it is to find another loan officer.

But at some point, recruiters and hiring managers are going to have to start reaching out to their contacts if they want to stay busy without sacrificing efficiency. In a fluctuating market, that makes it all the more important for them to integrate their pipelines with a technology platform that uses CRM functionality to track all of their outreach efforts in one collaborative space.

When it comes to what we can expect from 2021, the housing market isn’t much different from life in general: be hopeful and act as though things will start to get back to normal, but always expect the unexpected. Either way, the state of interest rates and the housing market in general seem to suggest that 2021 could offer a little something for everyone, if you know when and where to find it..