Many experts are predicting a much less frenzied market.
According to Fortune, for would-be homebuyers, that conventional wisdom has shifted. Not only does the spring housing market look like it’ll be red-hot, there’s a chance this goes down as the hottest spring homebuying season ever. Already, bidding wars are picking up again.
“Spring buying has sprung, and it’s wild and it’s crazy out there. It is causing some frustration at this point in the real estate market,” Devyn Bachman, vice president of research at John Burns Real Estate Consulting, told Fortune.
The housing market is coming off a year in which U.S. home prices soared an unsustainable 18.8%. So how can the market still be so hot? To explain what’s going on, Fortune built three charts showing where the housing market stands as we enter the spring season. When the pandemic struck, national real estate groups projected that the housing market would enter into a slump.
But it didn’t happen. Instead, by the summer of 2020 the housing market was booming as first-time millennial homebuyers, who were enticed by record low mortgage rates, rushed in to buy. That uptick in homebuyer demand saw inventory dry up. By the spring of 2021, housing inventory was down 32% from pre-pandemic levels. With buyers outnumbering homes for sale, they had no choice but to offer over listing price if they wanted to win. Cue record bidding wars last spring.
Industry insiders had hoped that inventory levels would begin to rise heading into this year. The thinking was that more elderly homeowners, who were cautious about moving during the pandemic, would begin to list their homes once they got the vaccine. Additionally, it was expected that some struggling homeowners who were exiting the COVID-19 mortgage forbearance program—which began to wind down in September 2021—would list their homes.