Over the past year, we’ve covered how red-hot the housing market has been. During the summer of 2020, the market was truly a seller’s one – defined by bidding wars and houses selling for way more than the asking price. Things have stabilized a little bit, but the market is still white hot. In fact, according to Redfin, the average home price in June 2021 clocked in at nearly $390,000 – and that’s up about 25 percent from the median house prices from last summer. What’s more is that most homes up for sale don’t even stay on the market for two weeks.
Noting all this, you may not be surprised to learn of an emerging trend among home sellers these days. According to a survey conducted recently by Rent.com, nearly 50 percent of all those who are selling their homes don’t plan to buy another one – at least not right now. Why? Well, while they might be able to make a significant return on their home sale, buying another one becomes tricky in this market, and the gains made from the sale could largely be offset by their next purchase – if they can find a home fast enough.
Renting Instead of Buying
So what are nearly half of all home sellers doing instead of buying another home? Renting.
Now, it’s worth noting that most home sellers who aren’t buying another home indicated that they may again purchase one eventually after the market cools down. But some of the reasons for opting to rent versus buy after a home sale include the high price of homes for sale, the frustration of getting into a bidding war with like-minded buyers or the fear of “settling” for a home that’s available, and not necessarily one that suits their current lifestyle. To the latter point, a recent poll from Bankrate found that about two-thirds of Millennial homebuyers had regrets about their purchase.
Some home sellers are moving in with a family member or a partner. Others are opting to rent a home or an apartment until they can get a better lay of the land for what the future may hold. And some sellers are fortunate enough to own multiple properties and are opting to sell while the market is hot and live permanently in one of their other homes.
What’s the Future of the Housing Market
Like we noted, the housing market has stabilized a little bit over the last few months. And with lumber prices also stabilizing, new construction is likely to pick up again, which will result in more inventory. Most real estate experts expect the market to come down to Earth sooner rather than later, which is when some of these renters might be more apt to purchase a property once again.