Indeed it has been an unusual summer. The continued threat of the novel coronavirus has given us a domino effect of sorts: quarantines that closed down several businesses (some permanently) which in turn is producing a wobbly economy, and layoffs happening left and right. It is no longer surprising that most who have initially planned to sell their property this season have either given up or are still wondering whether to put those plans on hold which, is quite understandable. However, after closely examining the current housing market conditions, many real estate experts believe this summer could be one of the best times to sell a home in years.
If you’re a home seller who assumed they should write off this summer’s home-selling season as a lost cause, it’s time for a reality check! Here are a few reasons why the market could actually be moving strongly in your favor.
1. Home buyer demand is back with a vengeance
The real estate market is already seeing strong signs of a rebound after a brief interlude last spring when COVID-19 put a halt to literally everyone’s lives. According to the National Association of Realtors®‘ Pending Home Sales Index (a forward-looking indicator of home sales based on contract signings). In May, after two months of decline, pending home sales shot up 44.3%—the highest month-over-month jump since 2001, when the index began.
According to Matthew Gardner, chief economist at Windermere Real Estate, the demand is strongest right now in the suburbs and in smaller, cheaper cities because buyers are looking to escape the big cities and the crowds. Additionally, more companies follow tech titans like Google, Amazon, and Microsoft in allowing employees to work remotely for the foreseeable future.
2. Home inventory is “historically” low
And yet, even through the influx of demand, the number of homes for sale is at an all-time low.
“There was insufficient supply last year,” says Lawrence Yun, chief economist of the NAR. “This year during the pandemic, the shortage has intensified.”
Some reasons for the shortage of available homes have little to do with the recent coronavirus crisis. The number of homes for sale is at a “generational low,” says Gardner, because people are living in their homes longer than they used to. In fact, NAR data shows that Americans are spending an average of 13 years in their homes before moving.
3. Home prices have dramatically shot up
It’s the law of supply and demand. Since the demand for homes have gone significantly up and inventory is way down, the conditions are perfect for home sellers to get high prices.
According to NAR , single-family home prices increased in most markets during the first quarter of 2020, with the national median single-family home price increasing 7.7%, to $274,600.
This good news may come as a surprise to sellers, since it was expected that the housing market would take a hit and home prices would drop because of the pandemic. That’s quite the contrary.
4. Mortgage interest rates are “historically” low, too
One other factor that’s pushing home buyers to shop are the historically low mortgage interest rates.
According to Freddie Mac’s July 2 report, average interest rates recently reached a new record low of 3.07% for a 30-year fixed-rate mortgage. Given this means homes could cost potentially tens of thousands less over the lifetime of the loan, it’s understandable that mortgage purchase applications have jumped since last year.
5. Home buyers’ needs have changed
Our lives have been radically changed because of the COVID-19 pandemic. Apart from the work at home situations going on across the globe, being confined at home has certainly made people look at their living situations differently. This, in turn, has sparked a fresh deluge of home buyers whose current homes no longer seem as comfortable or roomy as they were pre-COVID-19. Home offices, more privacy, outdoor spaces, a mudroom, and just more room are becoming more important to homeowners.
As a seller, playing up these features and amenities can attract buyers. Home staging and visually appealing listing photos, though always important, are especially crucial in today’s market.
In addition to understanding market conditions, home sellers will want to know that the process from offer to closing may work a little differently today.
For example, social distancing may mean home inspections and repairs take a little longer and already, some sellers are now doing their own pre-inspections and making reports available to interested buyers to speed up the process.
The bottom line: “You want to make it as easy as possible for a buyer to make an offer”