Although mortgage rates hover at historic lows, potential buyers are battling low housing inventory and higher prices. Homebuyers must act quickly when debating a purchase, sometimes offering over asking price or getting into a bidding war with other potential buyers.
Low inventory was an issue before the pandemic but homebuilders still haven’t returned to normal production levels to meet current demand and the supply shortage is weighing on the housing market even further with increased competition.
Housing affordability is a little easier on paper with low mortgage rates, but the bigger challenge may be trying to find a home. Housing demand has increased beyond expectations. Combined with historically low levels of inventory, affordability becomes an issue.
Price growth began accelerating for affordable homes after the World Health Organization declared COVID-19 a pandemic on March 11, according to Redfin. Home prices in many affordable areas have moved higher as buyer demand increased while the supply of homes for sale dropped. Experts think prices will likely continue to grow faster for at least the next few years given this lack of supply.
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