What It Means If Your Buying OR Selling
The real estate market is expected to do very well in 2021, with mortgage rates hovering at historic lows and forecasted by experts to remain favorable throughout the year. Home Values are going up in 2021, according to the experts. One challenge to the housing industry, however, is the lack of homes available for sale today. Last week, the National Association of Realtors (NAR) released their Existing Home Sales Report, which shows that the inventory of homes for sale is currently at an all-time low. The report explains:
“Total housing inventory at the end of December totaled 1.07 million units, down 16.4% from November and down 23% from one year ago (1.39 million). Unsold inventory sits at an all-time low 1.9-month supply at the current sales pace, down from 2.3 months in November and down from the 3.0-month figure recorded in December 2019. NAR first began tracking the single-family home supply in 1982.”
(See graph below):
Metro Detroit Inventory is Low
We have detailed the market stats by City and Price Range in a 3-year live feed. The trends are broken down by Average Sale Price and Month Supply on the Market for inventory trends. ☝☝☝
What Does This Mean for You?
If You’re a Buyer:
Be patient during your home search. It may take time to find a home you love. Once you do, however, be ready to move forward quickly. Have a plan on How To Win In A Sellers’ Market. Get pre-approved for a mortgage, be prepared to make a competitive offer from the start, and know that a shortage in inventory could mean you’ll enter a bidding war. Calculate just how far you’re willing to go to secure a home and lean on your real estate professional as an expert guide along the way. The good news is, more inventory is likely headed to the market soon, Lawrence Yun, Chief Economist at NAR, notes:
“To their credit, homebuilders and construction companies have increased efforts to build, with housing starts hitting an annual rate of near 1.7 million in December, with more focus on single-family homes…However, it will take vigorous new home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand.”
If You’re a Seller:
Realize that, in some ways, you’re in the driver’s seat. When there’s a shortage of an item, there’s a strong demand for it; the seller is in a good position to negotiate the best possible terms. We know there is a shortage today, and I’m recommending not Waiting For Spring to sell. Whether it’s the price, moving date, possible repairs, or anything else, you’ll be able to request more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Don’t be unreasonable, but understand you probably have the upper hand.
1. Higher Prices
With so many more buyers in the market than homes available for sale, homebuyers frequently enter into bidding wars for the houses they want to purchase. This buyer competition drives home prices up. This can definitely work to your advantage as a seller, potentially netting you more for your house when you close the deal.
2. Greater Return on Your Investment
Rising prices mean homes are also gaining value, which drives an increase in the equity you have in your home. In the latest Homeowner Equity Insights Report, CoreLogic explains:
“In the second quarter of 2020, the average homeowner gained approximately $9,800 in equity.”
This year-over-year growth in equity gives you the ability to put that money toward a down payment on your next home or to keep it as extra savings.
3. Better Terms
When we’re in a sellers’ market like we are today, you’re in the driver’s seat if you sell your house. You have the power to sell on your terms, and buyers are more likely to work with you if it means they can finally move into their dream home.
So, is low housing inventory a big deal?
Yes, especially if you want to sell your house at the perfect time. Today’s market gives sellers immense negotiating power. However, it won’t last forever, especially as more sellers return to the housing market next year. If you’re considering selling your house, the best time to do so is now.
The housing market will remain strong throughout 2021. Know what that means for you, whether you’re buying, selling, or doing both.
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As we move forward….
It’s been tough as we navigated through all the changes. Putting your dream of a new home on HOLD shouldn’t be one of them. Now more than ever, knowledge will be your power. Know the Market You’re In and your Negotiation Power. Check out Categories for additional updates regarding the Market | Buying & Selling.
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