The last year saw a home-buying frenzy. What can buyers and sellers expect this spring and summer? Montgomery County-based realtor Flo Williams has six predictions for the upcoming season, as well as some advice for those looking to buy or sell.
- First-time buyers can expect a less-competitive market
Some 72 million millennials took the real estate market by storm since 2020 when they unexpectedly entered the housing market as potential buyers. At the start of the pandemic they were getting priced out by veteran homebuyers. Williams said that this year first-time home buyers won’t have to compete as much, and that sellers may be more willing to help pay some of the buyers’ closing costs.
- It’s still a seller’s market, but the pace is slowing down A combination of low inventory and a decrease in new home listings caused home sellers to see an incredible amount of offers from buyers desperate to find their perfect house. The average amount of offers for a home peaked at 5.1 in April of 2021, according to the National Association of Realtors. Williams anticipates that sellers will still see multiple offers from buyers this upcoming season, but not as extreme as last year.
- Don’t expect house prices to decrease If you’re anticipating the average home value to go down any time soon, Williams said to not hold your breath. Real estate marketplace Zillow is expecting an 11% home value growth increase in 2022. While that is a decrease from the previous year, Williams suggests that there is a chance that interest rates will go up, so it’s better to buy now.
- Homeowners trying to buy second homes will have higher interest rates The introduction of remote work and extra time at home made many owners realize that they might need a home away from home. Vacation home demand increased 77% from pre-pandemic levels in 2021, according to Redfin. But if you didn’t get that vacation home last year, you might’ve missed out on a steal. Upfront fees for second-home loans will increase between 1.125% and 3.87% in April, according to the Federal Housing Finance Agency. Williams said that second-home buyers can foresee having to pay a little more.
- The Potomac, Germantown and Clarksburg areas are of interest to buyers Cities aren’t the best places to social distance, so when the pandemic hit, many people retreated to rural spaces across the country. However, the D.C. metro area saw an increase in house buying with Montgomery County leading Maryland in home sales. For Williams, the areas she has seen the most interest in are Potomac, Germantown and Clarksburg. Williams also said that she’s been seeing a number of her clients make the move to Frederick. But, if you are looking toward making the trip to the suburbs, get ready to compete, as it is the hottest housing market in the state, according to Rocket Homes.
- New construction prices will continue to be higher Remember at the beginning of the pandemic when finding simple necessities like toilet paper was a pain? It turns out that the lumber industry was also greatly impacted. The average price of newly constructed single-family homes increased about $36,000 from 2020 to 2021, according to the National Association of Home Builders. Williams said that although it’s a personal preference, she thinks that buying an already constructed home will have more value.
Advice to sellers
All in all, Williams said that the market will still look good for anyone thinking of selling this spring. She suggests that her sellers make renovations within their budget and try to make their properties look as appealing to potential home buyers as possible.
“A fresh coat of paint is not expensive. Staging your house is not expensive. You have to put yourself into the mindset of a buyer walking into your house for the first time.”
Advice to buyers
Don’t window shop for your next house. Be prepared! Williams said she recommends that buyers plan at least six months in advance. She also urges buyers to weigh their options fully before they take their next steps.
“Talking to a real estate agent or a lender is free, at least for a consultation. But it can really help put you into a position to buy or help you see what else it is you need to do so you’re ready to buy,” she said.