In a recent firsttuesday poll, readers were asked their thoughts on the most pressing concerns buyers encountered throughout 2021.
A significant 59% of readers said the extent of the massive real estate price jumps since mid-2020 is the factor of most visceral concern to today’s homebuyers.
The remaining respondents had varying answers to this question, including:
- 34% referencing a lack of selection among properties on the market for sale; and
- 7% referencing a rise in purchase-assist mortgage rates charged to buyers
Editor’s note – Respondents were also given the choice of whether the sparse amount of information made available about property listed for sale was of the most concern to buyers, though this option received no votes.
To provide historical context, readers were asked a similar poll questions a few years prior. In a 2018 firsttuesday poll, readers were likewise asked about the greatest concerns voiced by buyers, with responses ranging from:
- 47% saying price inflation;
- 45% saying rising interest rates; and
- 8% saying rejected offers.
The 2018 poll showcases a pre-pandemic housing market. However, both polls indicate the same primary concern perceived by readers – significant price increases.
Related article:
Most recently, September 2021 saw California home prices continue to rise, though the magnitude has fallen back since mid-2021. Year-over-year, California home prices averaged:
- 19% higher in the low tier;
- 20% higher in the mid tier; and
- 22% higher in the high tier.
These rapidly rising prices are understandably one of the main concerns for homebuyers. Home prices have increased primarily due to an imbalance between California’s ever-increasing demand for new housing and available inventory. Further, home price increases have been fueled by low interest rates, as homebuyers have found themselves able to qualify for more principal in 2020-2021.
However, homebuyers can look forward to a cooling in prices on the horizon. With the recent end of the foreclosure moratorium, expect to see forced sales add to the multiple listing service (MLS) inventory, putting downward pressure on prices. Prices will also feel downward pressure from both rising mortgage rates and the waning impact of government stimulus.
Expect home prices to level off and decline beginning in 2022, bottoming around 2024-2025. Before a sustainable and balanced recovery takes shape in the housing market, all jobs lost to the 2020 recession will need to be regained. As of September 2021, we are still just over one million jobs short of this goal, not likely to return to full employment levels until around 2024 at the earliest.
Related article:
