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AAFMAA Blog

Fall 2021 Housing Market Update

2021-10-04

Now May Be the Right Time to Refi OR Buy

Historically, the second quarter of each year is a strong one for housing, and 2021 was no exception. Many cities experienced double-digit percentage increases in housing prices and low inventories of available homes, creating a seller’s market. “In response, home prices rose, there were bidding wars on properties, and sellers had the upper hand in negotiations,” says Jeff Havener, President of AAFMAA Mortgage Services LLC (AMS). 

This led to some desperate buyer behaviors such as forgoing contingencies in the sales contract (meant to protect buyers and their earnest money), he notes.

At the same time, we’ve all become more accustomed to safe-distance buying and selling as COVID-19 and its variants surged once again. To avoid contact with people in crowded cities, some people moved to rural areas. In 2021, the ten states with the fastest growth rates were: 1) Idaho; 2) Nevada; 3) Arizona; 4) Utah; 5) Texas; 6) South Carolina; 7) Washington; 8) Colorado; 9) Florida; and 10) North Carolina, according to Zippia.com and leveraging U.S. Census data.

Mortgage interest rates stayed low, enticing many new first-time homeowners to enter the market. But, again, inventory made buying more difficult as many would-be sellers decided to sit tight, choosing to spend money on improving their living and workspace rather than on moving and having to buy again with prices so high. 

With sellers leery about having strangers in their homes — not to mention loads of economic uncertainty — housing inventory reached its lowest level since Realtor.com® began tracking such data in 2012. Since Q2 2021, listings have recovered slightly but still remain fairly low. It’s possible that widespread COVID vaccinations will help loosen supply constraints and get sellers back on the market.

All of these factors affect AAFMAA Members whether you’re buying or selling, or just staying put for the time being. Let’s take a closer look at what we can expect in the coming months.

(Related: Are you renting? Here’s how to determine when it’s financially better to buy.)

Prices May Cool Slightly

Nationwide, home prices (including distressed sales) rose by 17.2% in June 2021 compared with June 2020 — a record high, notes CoreLogic. And while there have certainly been hot sellers’ markets before, more than 50% of the homes today are selling over the asking price.  

However, we may see a cool down this fall with prices as inventory levels rise. 

According to the National Association of REALTORS®, the number of unsold homes rose 3.3% to 1.25 million from May to June this year. Although the increase in inventory is not enough to satisfy demand, this slight uptick may give buyers hope and possibly boost their buying leverage with more options to choose from.

Mortgage Rates Go Higher

Since the beginning of 2021, the average 30-year fixed mortgage rate increased sharply, topping out at 3.18% in early April. Since then, rates have gradually decreased hitting 2.78% in late July.

The mortgage rates on both fixed 30-year and 15-year mortgages have been sitting at record-low averages since last summer, bobbing between the low-3% and mid-2% range. But they will not stay that way forever. Experts, such as Frank Nothaft, chief economist at Corelogic, predict a gradual rise over the course of 2022, gaining probably about half a percentage point.

(If you’re thinking about refinancing your VA Loan this might be the right time.)

Buying and Closing Virtually

The entire home-buying process, from home shopping to shopping for mortgages, to closing on your loan, was already going paperless prior to COVID; the pandemic just accelerated and refined that process. 

Today’s buyers tour homes online, find qualified and experienced real estate agents and lenders to help them, and close on their loans remotely if that’s allowed in their locale. 

“In general, we think these changes are positive and here to stay. After all, military families have purchased homes from afar (sight unseen) for years,” says Anthony “TJ” Powell, Executive Vice President of AMS.

Finally, don’t try to “time” the market,” say the experts. “If it makes sense for you to purchase a house right now, and you’re set financially, you should move forward,” adds Robert Greenbaum, Chief MarketingSales Officer at AMS. “Just be sure to stay within your home buying budget.” 

(Our online calculator can help you estimate the home price you can afford based on your income, debt and down payment.)

If you’re not certain about whether or not it’s the right time to purchase a home, or refinance your existing mortgage, please contact AMS online today or give us a call at (877) 387-6856.