Post Pandemic: What Does Real Estate Look Like?

Post Pandemic Real Estate

There’s more uncertainty in the national real estate market than we’ve seen in some time. We’re two years beyond the onset of COVID and while we’re past many of the main health concerns of the virus, obstacles still remain. Remote work is likely here to stay, thus there are adjustments to housing post pandemic, which continue to unfold and impact the market. Is time running out for sellers to take advantage? Will buyers have a better chance of acquiring real estate being that their purchasing power has somewhat diminished? What’s in store for our market in the Greater Scranton area?

The future of real estate isn’t as dark as some would have you believe. The chance of a housing crash, the likes of 2007-2010, lacks much supporting evidence. In fact, the exact opposite might be true. Many experts are calling for a busy spring market this year and even Zillow projects home appreciation to hover around 9% for 2022. Many of the conditions, which existed prior to the housing bubble, simply aren’t present. When the market began to tank fifteen years ago, there was a surplus in housing inventory, mortgage lending resembled the Wild West and foreclosures occupied their fair share of the market.

Today, the narrative is quite different. There are shortages in markets throughout the country. Here in Northeastern Pennsylvania, our month’s supply of homes continues to unimpress buyers: year-to-date we sit at 1.29.* A magnifying glass would be required if the inventory got any smaller. In the four years, which consisted of the housing bubble, the market was heavily in favor of buyers and saw surpluses of housing between 7.3 and 9.6 month’s supply, according to the National Association of REALTORS®. Furthermore, lending restrictions are much tighter than those that existed fifteen years ago. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act became law with its eye toward consumer protection and a reform of the lending industry, especially riddance of predatory lenders. In general, those who are approved for a mortgage in 2022 are much more qualified than those approved even a dozen years ago. Finally, negative equity in the national housing industry has reached its lowest level over this same period of time. Much fewer homeowners are underwater than were during the housing bubble.

The future of housing post pandemic is not scary. Actually, 2023 will probably resemble 2019 more than it will last year. Inventory will bounce back, but that might take a year or two. The immediate future for sellers does pose a threat to them receiving top dollar for their investment. “There’s a little insanity in our market right now,” maintains Amy L. Kiesinger Bohenek, an Associate Broker with Realty Network Group. “Listing agents are faced with multiple showings and offers, sometimes over asking price. The appraisal process can be cause for a headache from time-to-time too. When a home doesn’t appraise, where does that leave both parties, especially the seller?” Despite this, the window for bidding wars and high price appreciation is closing. Despite climbing mortgage rates, demand for housing remains strong. Price appreciation will continue to trend up, albeit home prices shouldn’t be in the neighborhood of 18%, like much of last year. Sellers in our region should act sooner than later if they want to take advantage of this market they find themselves firmly entrenched.

Buyers must hang in there if they have a desire to pursue real estate anytime soon. The question remains, how can you sit tight when your purchasing power appears to be vanishing? Homebuyers have seen the average thirty-year fixed mortgage rate increase to roughly 5.3%, which is about 2% higher than it was at the beginning of the year. Many first-time buyers are already struggling to get their foot in the door and compete with others, including investors. Higher rates, for those who require a mortgage, generally mean they’ll have less to contribute toward a monthly payment. That’s why it’s important for buyers to have a plan, stick to a budget and know what they can afford.

In addition to the factors listed above, real estate in Northeastern Pennsylvania continues to have affordability as its ally. Year-to-date, the median home sales price is $179,000 (up 7.7% from the previous year).* New listings are down slightly, but inventory is expected to pick up. The groundwork for homes to appreciate at a slightly slower pace with small improvements in inventory is being laid. With an increase in buyer and seller competition that’s sure to come this spring and summer, being too conservative, will surely impact homeowners thinking about selling.

 

* Greater Scranton Board of REALTORS®

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