National pending home sales decreased 2.3% in September compared to August, signaling a slight cooling of the white-hot housing market we saw most of this year. But don’t be fooled – although sellers are seeing less offers above asking price and homes are taking a bit longer to sell, it continues to be very much a seller’s market. Mortgage rates remain near historic lows and the competition to find the right home in such limited supply is fierce.
The fall and winter months are shaping up to be an optimal time for buyers to make moves. According to a recent Fannie Mae forecast, median home prices are expected to rise 7.9% by the end of 2022. In addition, the latest Kansas Housing Forecast Series report from Wichita State University predicts that construction will remain constrained by supply chain issues and home prices will continue to rise. Lawrence and Douglas County leaders have been reluctant to approve development ground so expect even tighter supply of new construction in the next few years. With the prediction that mortgage rates will also climb next year, buyers should heed the advantages that colder months present.
Although the local market is still competitive, Fall and Winter typically produce a drop in prospective buyers due to frigid weather and the busyness of the holiday season. Less competition means sellers may be more motivated to make deals, and additional bonuses like last-minute tax savings and faster closings are attractive reasons buyers should consider a winter move.
Sellers can also profit from putting their home on the market this quarter. Buyers this time of year are likely serious buyers – motivated to move before year end and start 2022 in their new home. With less listings than there are in the spring and summer months, any home on the market is going to stand out even more.
A global shortage of supplies means that buyers and sellers should set expectations to what they need to do to make a deal. Buyers should not always expect brand-new appliances like washers, dryers, and kitchen appliances, while sellers should plan far ahead to complete renovations and changes that will entice buyers to make an offer.
The bottom line is that low interest rates will continue to motivate buyers to search for a home during the colder months, but sellers need to accept that buyers will not be willing to overlook imperfections like they might have a year ago. Both parties will benefit from making a deal that closes out 2021 with a bang