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Will the ultra-competitive housing market cool off this fall?

What we'll cover

  • How inflation could impact home prices

  • Reasons to evaluate long-term value

  • What low mortgage rates mean for the market

As the calendar pages flip toward 2022, you might be wondering what the fall homebuying market looks like if you’re hoping to purchase a house by year’s end. In the wake of the pandemic, the market has endured both ups and downs. Historic low interest rates combined with changing priorities for homeowners led to a competitive sellers’ market. Low inventory led to bidding wars. But as the pandemic has eased in many parts of the country, more sellers regained confidence in the economy and put their houses on the market.

As we look to the last quarter of the year, mortgage rates are stabilizing, but buyers are concerned about looming inflation and the housing shortage in many cities. Despite  continued uncertainty and competition among buyers, now is still a great time for prepared buyers to make their move.

Consider your location

During the pandemic, many people began to think differently about how and where they wanted to live. With the rise in remote work, it became less important for workers to live near their place of employment, making less densely populated areas more popular. Spending more time at home also increased homebuyers’ desire for more space and put a higher priority on outdoor living.

That means some locales are seeing a lot more demand and activity than others. Nationwide, the market is about 4 million homes short of demand . When you zoom in on specific markets , the picture is more nuanced. The squeeze is especially tight in cities such as Phoenix and Dallas, while it’s less pronounced in others, like Fort Wayne, Indiana, and Spokane, Washington.

Despite continued uncertainty and competition among buyers, now is still a great time for prepared buyers to make their move.

What about inflation and high home prices?

Inflation has raised the price on everything from gas to groceries and yes — homes. As of August 2021, the average home price in America was the highest it's ever been. But there are signs that costs have already begun to fall and will continue to do so. Mortgage applications have dropped to an 18th-month low, which means sellers are finally slashing their listing price. The all-out buying frenzy and stiff competition among buyers that characterized much of the year will likely slow down.

Traditionally, autumn is a time when the housing market cools off. Buyers can count on getting better deals once they feel a chill in the air. Last year, the pandemic made the seasonal shift less predictable than usual, and the market did not fall in tandem with the temperature. This year, we’re likely to see more of the typical pattern return.

Think about long-term value

When considering a home purchase, it’s always important to evaluate a property’s potential to increase in value over time. If you’re financially prepared with a down payment and ability to pay your mortgage, buying a home is still a smart way to build wealth. The national median resale price increased 35% from 2009 to 2019. Buying a home you can afford now is a great way to secure an asset that will appreciate in the long-term.

Mortgage rates are still low

Continued low mortgage rates are another positive factor that make for an optimistic picture for homebuyers this autumn. Nationally, the 30-year fixed mortgage rate is hovering around 3% and experts anticipate mortgage rates gradually increasing through the end of the year. Taking advantage of low rates now can translate to lower spending on interest charges throughout your loan's lifespan.

Combined with Ally Home's no lender fees on new home loan applications, low interest rates make now a good time to buy.

Fall into homebuying

The recent uncertainty in the residential real estate market may have you thinking about tiptoe-ing through the colorful fall leaves, instead of making a confident walk towards your future home. With an anticipated increase in inventory and continued low interest rates, you have good reason to make your homebuying dreams a reality before ringing in the new year.

Glenn Brunker is president of Ally Home, responsible for leading the growth of the company's mortgage business. He has oversight of the direct originations and bulk acquisition businesses as well as responsibility for the servicing platform. He also leads the secondary marketing and business line risk functions.

Glenn has extensive executive experience in leading banking operations, secondary marketing, production channels and all key risk functions. Before joining Ally in 2018, he held leadership roles in financial services at Bank of Oklahoma Mortgage, Fifth Third Bank, National City Bank and Oak Street Mortgage.

Glenn is a native of Chicago, and has a bachelor's degree from Northern Illinois University and an MBA from DePaul University. He currently lives in Charlotte, North Carolina.

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Image of Glenn Brunker, President of Ally Home.

Glenn Brunker
President, Ally Home

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