It’s shaping up to be the most competitive home buying season yet and prospective homebuyers know they are entering a seller’s market. In markets with limited inventory, bidding wars are becoming the usual. While home prices are soaring, Americans remain optimistic about the state of the housing market.
In fact, 64 percent of American adults believe home prices in their local area will continue to increase over the next year according to a recent Gallop survey. This is up 9 percentage points from the past two years, and marks the highest percentage since the housing market crash.
Following this trend, according to Fannie Mae’s most recent monthly sentiment index, consumer confidence in housing hit its highest level on record this past April. The index reported that the percentage of those who think it’s a good time to sell and those who think prices will continue to rise saw the largest increase – up to 45 percent and 49 percent, respectively. This optimism was also shown in an increase of perceived job stability and likeliness of income.
“Consumer attitudes remain resilient going into the spring/summer home buying season,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, the upward trend in the good-time-to-sell share seen since last spring has done little to release more for-sale inventory. The tightest supply in decades, combined with rising mortgage rates from historically low levels, will likely remain a hurdle for mobility and a persistent headwind for home sales.”
In the index’s six components, only the percentage of people who think it’s a good time to purchase a home fell – and, given the high competition expected this buying season this was not unexpected. But nonetheless our largest generation, millennials, is entering the homebuying years, and demand is still expected to increase despite higher home prices and decreases in supply of starter homes. But, this doesn’t mean that first time buyers are out of luck. There are some creative strategies to make your offer stand out, even in a competitive marketplace. Both your lender and your realtor can offer insight into making a strong offer with the best chance of winning a bidding war.
How do you feel about today’s housing market? Share your thoughts in the comments below!