I don’t have to tell you 2021 has been a seller’s market in real estate. That means sellers have had the advantage. If you think about the law of supply and demand, you can relate it to real estate. There have not been enough homes to sell so the price goes up and the buyers are competing for the homes that are on the market. October 2021 brought $6.34 million in sales, a median sales price of $353,900 and 2.4 months of inventory across the U.S. The median sales price is up 13.1% year over year, and inventory is down 12% from October 2020.
The states with the top five highest homeownership rates were: Maine (75%), West Virginia (74%), Wyoming (74%), Minnesota (74%) and New Hampshire (73%). Buyers have been forced to give up home inspection, appraisal and financing contingencies to win the bid. Sellers have been receiving multiple offers and contracts for more than the asking price. This type of market is not healthy because many buyers will not be able to make a profit, or possibly even break even, when they need to sell their homes in the future.
First-time buyers and families with modest incomes often are priced right out of buying a home – and maybe you’ve noticed, prices rarely go back down once they have risen.
That deceleration could be the start of a a bigger cooldown. At least that’s what Realtor.com, a real estate listing site owned by News Corp., is forecasting. By the end of 2022, the site is predicting U.S. home values will climb just 2.9% as rising mortgage rates take some steam out of the market. That would represent both the smallest annual uptick since 2012 and also a big-time slowdown from the 19.5% U.S. home price jump posted in the S&P CoreLogic Case-Shiller Index from September 2020 to September 2021 (according to Fortune.com’s Lance Lambert).
So rates will go up a bit and home sales will relax a bit. This will not be remarkable enough to change the market from a seller’s market to a buyer’s market.
What to do
If you want to move or need to move, then selling your home will be easy. This is, if it is in good condition and priced right. Buyers may be competing for homes for sale, but the are smart and not going to overpay for a house that isn’t “cared for.”
If you are a buyer, then get ready. Find a Realtor who knows how to find you the house you want by staying on top of new listings. Hire a Realtor who will do their homework and give you solid advice about how much the home is worth in the current market. Listen to your Realtor’s suggestions about how to get your offer accepted. You may be in a position to get aggressive and you may need to hold back. This is when your Realtor and your lender are a team who work on your behalf.
Real estate is an exciting career and I have loved having the privilege of writing these articles weekly for you this year. As president of the Lynchburg Association of Realtors, it is an honor to represent our local Realtor professionals. Don’t forget – call a Realtor.