YOUNGSTOWN, Ohio (WKBN) – We’ve all heard the reports about the lumber shortage, skyrocketing home prices, buyers coming in with cash offers and bidding wars that force a house thousands above the listing price. It’s a tumultuous time for home buyers and sellers alike, but is it prudent to stand back and put your dream home on hold?
Well, the answer is not an easy one. Youngstown State Economics Professor Albert Sumell said a lot depends on whether you are looking at your house solely as an investment or its usage.
“If you are not planning to sell it soon, it really doesn’t matter. You are still going to get something for it. It’s hard to predict with any asset. It is likely the housing market increase will continue until at least the end of this year. When housing prices go up, it is usually seen through the lens of an investment, but its usage is usually why it’s purchased. But if you are living in that house and using it, the only way it would impact you is if you sell it,” Sumell said.
If you overpay for a house and it’s the home you want and your plans are to stay there for some time, securing the deal with an aggressive offer could be the way to go.
The average length of time a house is staying on the market is 33 days faster than at the same time a year ago. That number was at 39 in May and 43 in April, according to realtor.com.
Many are scared away from the market right now, fearing another housing bubble, and others are just being priced out, but the pace of annual price growth has been slowing since its high of 19% in early April, according to realtor.com. If the downward trend continues, prices could return to a somewhat normal pattern in the next six months.
While overall inventory is down 42% compared to last year, new listings rose 4% compared to the same week last year, which opened up some inventory and reduced some prices, giving buyers more options.
Another plus is that lumber prices are now beginning to stabilize. After skyrocketing to record highs in May, futures for July delivery dropped more than 40%. At its peak, the cost of lumber added $36,000 to the price of a new home. Many new home buyers at that time said. “No, thank you.”
Experts believe that a true slowdown in the market will begin when interest rates go up. Right now, they are at the lowest in decades at about 3% for a 30-year mortgage. The lowest was 2% last year.
“In the end, the change in the housing market is good. It’s been a depressed housing market for decades. A lot of good things can come from an increase. Overall, it’s a positive for the economy,” Sumell said.