Q: The news from the real estate market can be confusing. What do I need to know as a buyer or seller, about today’s real estate market?
A: Trends and stats in real estate are constantly changing, especially during the unstable economy of COVID-19. Here’s all you need to know about the real estate market today.
Is it a buyer’s market right now?
Actually, pickings are slim for home buyers right now, giving sellers the upper hand and driving up prices for buyers. According to the National Association of Realtors (NAR), inventory was down nearly 20% in October 2020 compared to October 2019.
Low supply also means homes are on the market for less time than in other years. According to the NAR, in October 2020, more than seven out of every 10 homes sold were on the market for less than a month. Buyers don’t have the leisure of time for deciding and may get caught in heated bidding wars.
If you’re in the market for a new home, be prepared to change some of your must-haves into nice-to-haves. You may also want to expand your search to include other neighborhoods or home types than you originally planned. And of course, don’t forget to have your mortgage pre-approval in hand before beginning your search. This will give you a leg up on bidding wars and show sellers you’re serious about buying.
What does low inventory mean for sellers?
An uneven balance that favors sellers means homeowners who are looking to sell will have more offers than anticipated. They may be able to choose the best offer for their home — perhaps even at a price that is higher than expected as well.
If you’re selling your home right now and have plans to purchase another, remember that the things making it easier for you to sell your home in this market will also work against you when you purchase a new one. Prepare for prices that may be above market value and a pressured buying environment.
Is home equity up?
According to the NAR, home prices have swelled to a national median of over $300,000, with October 2020 marking 100 consecutive months of year-over-year price gains. CoreLogic’s 2020 3rd Quarter Homeowner Equity Insights report shows that the average U.S. household with a mortgage now has $194,000 in home equity. These factors make it a great time to sell a home.
If you’re selling your home, then it’s a good idea to work with an experienced agent to ensure you get the best possible offer for your home.
Planning to buy a home in this market of increasing home prices? Make sure to work out the numbers and to determine how much house you can afford before starting your search.
If possible, consider choosing a 15-year fixed-rate conventional mortgage, which will give you the lowest overall price on your home.
Are interest rates for real estate still low?
Interest rates reached record lows in 2020 and economists are predicting low rates continuing through 2021.
For buyers, this helps make homes more affordable. However, it’s important not to let a low interest rate make you think you can afford a home containing a price tag that is really out of your affordability. As mentioned, be sure to run through the numbers and determine how much house you can really afford before you start looking at houses.
How is the home buying process different right now?
COVID-19 restrictions are making many parts of the home buying process virtual now. Some sellers are only offering virtual tours to only very serious buyers. Other parts of the process, like the attorney review and the actual closing, may be done virtually using remote online notarization and electronic signature apps.
What do I need to know about the real estate market if I don’t plan to buy or sell this year?
According to Freddie Mac, equity will likely continue to rise in 2021. But it will be at a more controlled pace. You may want to monitor how much your home is worth this year since you may change your mind about selling before the year is up.
Similarly, if you’re a homeowner with no plans to move, this can be a great time to tap into your home’s equity with a home equity loan from United Texas Credit Union. Contact us at (210) 561-4500 or shoot us a line at firstname.lastname@example.org to find out more.
Your Turn: Have you bought or sold a home recently? Share your best tips with us in the comments.