The year 2020 will go down in history as one of the most challenging. With all the chaos in the world, it was hard to predict how profoundly it would affect the housing market.
In the spring of 2021, the market made a swift turn upwards. While this is the hottest sales time of the year, no one expected the housing market to rebound so impressively. The sales during this time made up for the horrible losses during the start of the pandemic.
Understanding The Seller’s Market
You’ve probably heard that it’s a “seller’s market” for home buying in 2021. Things alternate between a seller’s and buyer’s market depending on what’s going on in the world. However, no one could have dreamed how quickly homes would sell and for the price points they did.
Sellers found they could ask top dollar for their dwellings and sift through several offers, many for the above-asking price. Even areas of the country where things don’t typically move so fast were inundated with how quickly homes were moving.
Many houses didn’t even make it on the market 24 hours before there were multiple contracts on them. So if you wanted to make a purchase, you needed to have the best offer, few stipulations, and be ready to move quickly. However, during this time, researchers noted some movements that made the 2021 market unique.
Real Estate Trends 2021
While the pandemic has waxed and waned during the past couple of years, the market is steady. Here are some of the trends experts have notated.
- Inventory is Low
It seems crazy to think that the homes on the market are slim to none during a pandemic. The inventory is so low that many people must search for many months even to find someplace decent. Additionally, many home buyers are considering rehab projects to have a place to call home.
By examining the past two previous years, the inventory for 2021 is about 30 percent lower. Simply put, there aren’t enough houses available to meet the demands of the buyers. If you find a home you like, you can’t sit around and think about it for too long.
The best homes are sold first, and what’s left are homes that need a lot of work. The average home sold 20 days quicker than it has in the previous three years. Those searching for a home need to give up some of their wants to be in the neighborhood and price range they desire.
- Sellers Are Picky
Potential buyers must get that preapproval in hand, as most sellers won’t entertain your offer without it. Doing as much legwork ahead of time gives you advantages. Sellers love the competition and that they can get more out of their home than they dreamed.
If you put an offer on a home with a bunch of contingencies, then it’s likely to be passed over for an offer without such stipulations. Also, loans that must wait for your home or through lenders like the USDA can be red flags to a seller. See, these things add time to the process, and a seller wants to move their property and get their money as quickly as possible.
- Housing Prices Are Still On The Upswing
It’s been many months, and the housing prices are not showing any signs of going down. On the contrary, home prices are up more than 20 percent and rising. For the United States, the national medium house price was $300,000 last year, but now it’s been increased to $400,000.
Buyers need to have more money down, preapproval for a specific amount and be ready to move. Sellers find this great for sales but finding another home of equal caliber in the same price range is tricky.
Your mortgage cost should be no more than 25 percent of what you bring home. Brace yourself because this price must include taxes and insurance too. Try not to buy unless you have 20 percent to put down on the home, as you will be stuck paying PMI until that 20 percent is reached.
The only lender that won’t make you pay the PMI premiums is the USDA, and their closing process is usually anywhere from 40-60 days.
- Interest Rates Remain Low
Another trend driving this housing market frenzy is that the mortgage interest rates in 2021 are still low. At the start of 2021, recorded rates were as low as 2.2 percent. According to economists, this is the lowest rate in more than three decades. It’s anticipated that they won’t rise above the three percent market for this entire year.
While the lower rates mean you can afford more of a home, be careful not to overextend yourself too much. The amount of your down payment, as well as the type of mortgage you select, plays a big part in overall affordability.
Sellers shouldn’t hold out too long if they intend to sell, as no one knows what 2022 could bring. Instead, you should take advantage of these super-low rates, even if you refinance your current mortgage.
- Online Real Estate Services Are Growing
Buying a home with the click of a button has never been easier. With sites like Zillow, people can search for their dream home without moving from the couch. In addition, you can sell your home on these sites without paying as much in realtor fees.
The virtual agent handles sales, and it’s a fraction of the cost of the standard commission fees. Virtual agents have emerged, but many are closing their homes online rather than in an office. Nevertheless, handling things virtually is a big trend for the housing market in 2021, and your electronic signature is just as good as one done in person.
Looking Ahead
While many people are waiting for the bottom to fall out of the housing market and things to crash, the trends show otherwise. Expect 2022 to have some of the same inventory issues and high prices. Also, the interest rates could rise a bit, but it’s not estimated that they will go too high either.
All this forecasts that the seller’s market could be around for a bit longer. So, if you’re looking to buy or sell a home, you need to move quickly. For more information or to talk to an agent, contact Sheridan Solomon & Associates today.