While a public health crisis gripped the country for the last year, the housing market for some stayed red hot. Most areas of the country remain in a solid seller’s market. Homeowners have seen their home values appreciate and equity grow. Housing inventory was already down at the beginning of the pandemic, and remains low. However, demand remains high. Not everyone was hurt bad enough by the downturn in the economy to hold off buying a home. With historically low interest rates throughout the year, there have been plenty of buyers ready to snap up just about anything that appears on the market. At the same time, people that want to move, especially those looking for affordable housing, are having a difficult time, because there are just not enough homes for sale.
When you look at market statistics overall, the pandemic did have a significant impact. Last March, home sales in the US fell 8.5 percent from February 2020. On a seasonally adjusted basis, February 2020 sales reached a peak of 5.8 million and fell to 5.27 million in March 2020. New construction fell about 15 percent, the worst showing in 6½ years.
Because almost 40 million Americans lost their jobs at the start of the pandemic, the housing market sunk further. However, new home sales rose slightly, surprising many.
One thing that helped rural areas- people were looking to move out of cities for larger homes with more space and amenities, and also possibly away from COVID concerns. By June and July, it was clear that there was a mass migration out of urban areas. This was helped by people working remotely, preferring to work in a more desirable, less populated location. According to a study from the Pew Research Center, 71 percent of Americans say they are working from home part time or full time and say they want to keep working from home even after the pandemic ends.
Home prices continued to rise, in some cases dramatically. It’s fair to say that nearly everywhere in the country, homes rose in value. According to Realtor.com, since the start of the pandemic, home prices have risen an average of 14.3 percent. However, on average there are 50 percent fewer homes are on the market.
In short, the housing market bounced back so quick, the small blip of stagnant activity at the beginning of the pandemic has long been forgotten.
When you look back at history, you will see real estate markets go up and down. According to industry observers, the market will not stay high for sellers if people don’t decide to sell their homes.
But there are a lot of reasons sellers haven’t wanted to move. Historic-low mortgage rates have a lot to do with it. People that refinanced made it incredibly cheap to stay put. Also, if they wanted to stay in their own community, lack of inventory has been a barrier to moving. However, those homeowners that already own a second property, or have somewhere else to move to, can take good advantage of the market and should consider selling now.
One more thing- staying put and making upgrades has become an impractical solution. Lumber prices have risen 375% over the past year for a variety of reasons.
Bottom line, if you already have a moving plan, such as relocating to another property you own or renting for a while, you can take advantage of this high seller’s market. But be advised, what goes up, ultimately goes down, eventually. We have already seen interest rates inching up, which may start to rebalance the market. So, the window of time we are in a seller’s market will be limited.