The housing market. It has been a roller coaster ride since the pandemic, making it perhaps a more difficult time for a first-time homebuyer to buy a house.
In June of 2021, the average cost of a house increased by 13.2% compared to the same time last year. House prices are by no means a deal these days, and you will likely have to bid above the asking price.
But, does that mean it will stay that way? Will house prices go down?
Here are some factors to watch.
Days on Market
This will give you a good idea of how many houses are available and if the listed house price is one that buyers feel comfortable with.
In 2021, the average days on the market for a house in the United States are the lowest that they have been in at least five years. In January of 2020, houses typically spent about 85 days on the market. Then, in September of 2021, houses spent just an average of 43 days on the market.
What does this mean? It means that houses take half as much time to be sold, which suggests that there is not enough to go around.
Since the pandemic, the highest monthly average for days on the market was 76 days, back in January of 2021. It has not come close to that since, with the average days remaining consistent for the last six months.
Part of the reason why there are not as many houses to go around is that new ones had to stop being built because of the pandemic. But, not only were they not built, they got very expensive to build in 2020 once work could be resumed.
This is because of the rising cost of lumber. For 1,000 board feet, it was costing nearly $1,700 in May of 2021.
Thankfully, this has calmed down a little, with the average in October of 2021 being about $755. However, the problem is still not completely resolved because, before the pandemic, the cost was less than half at $326.
So, as long as it costs a lot more for lumber, new houses will either be a lot more expensive to build or will not be built at all, which will affect market availability.
With cities shutting down and people either losing their jobs or having to work remotely, this has made some people elect to move out of cities and buy bigger homes in the suburbs.
This article shows how many people moved out of certain areas for every person who moved in. Some of the most notable sections are that New York and San Francisco lost around 10% and 8% of their population respectively during the pandemic.
To contrast that, Hudson County, right outside of New York City, saw an 88% increase. Truckee, not far from San Francisco, saw a 24% increase.
Granted, this is not every city and people may go back once more work and entertainment opens back up. However, others may permanently stay out and discover the benefits of either working from home or having more space.
Will House Prices Come Down?
House prices seem to not be going anywhere. While they may not dramatically increase like the last 18 months, there are still factors such as house availability, cost of lumber, and lifestyle changes that need to be accounted for.
For more housing market predictions, check out other articles in the Real Estate section.