Through all the challenges of 2020, the real estate market has fared very well, and buyers continue to benefit from historically low mortgage rates. Real Estate Magazine only explained:
“Although winter can be usually a slow season in real estate, economists predict it is unlikely to happen this year … Low inventories combined with high demand due to record low mortgage rates sending buyers to the market in a downpour. “
However, one challenge for the housing industry this winter is the declining number of homes for sale. Lawrence Yun, Chief Economist for the National Association of Agents of Agents (NAR), recently said:
“There is no shortage of hopeful, potential buyers, but inventory is historically low. “
In addition, Danielle Hale, Chief Economist by realtor.com, notes:
“Fewer new sellers come to market while more than usual number of buyers continue to look for domestic causes inventory to further evaporate. “
One main indicator that the industry uses to measure housing is the monthly supply of inventory. According to POMEGRANATE:
“Monthly supply refers to the number of months it would take to sell the current inventory of homes on the market, given the current sales rate.”
Historically, a six-month supply is considered a normal real estate market. Entering the pandemic, inventory was already well below this mark. As the year progressed, the supply was reduced even more. Here is a graph showing this measure over the past year:
What does this mean if you are a buyer?
Be patient during your home search. It may take time to find a home you love. Once you do that, be prepared to move forward quickly. Get it pre-approved for a mortgage, be prepared to make a competitive bid from the outset, and understand how the lack of inventory has led to more supply wars. Figure out how far you’re willing to go to secure a home if you really love it.
What does this mean if you are a salesperson?
Be aware that somehow you are in the driver’s seat. When a lack of an item at the same time is a strong demand for it, the seller is in a good position to negotiate. Whether it’s the price, transfer date, possible repairs, or something else, you’ll be able to ask for more from a potential buyer at such a time – especially if you have a lot of interested buyers. Don’t be irrational, but understand that you probably have the upper hand.
The housing market will remain strong throughout the winter and going into the spring. Know what that means to you, whether you buy, sell or do both.
Content previously posted in Keep Current Things