Thinking about buying or selling your home in 2020? The current housing market is the sellers’ dream.
With record low mortgage rates, low supply, but high demand, sellers have seen 5 to 10 offers in one day.
In response to an economic downfall amid the pandemic, the Federal Reserve cut interest rates, resulting in the average rate on a 30-year fixed mortgage going below 3%. Generally, in the past five years prices have gone up because the demand has been high due to a booming economy, and the supply has been low due to a number of factors such as amount of construction or available land for development. The COVID-19 pandemic has made suburban homes more appealing and city residents are now being drawn to the more private and secluded benefits a suburban home offers.
The current home inventory cannot keep up with the demand, creating massive bidding wars and offers way above asking prices. In some instances, buyers are putting in offers before even viewing the home. Home sales spiked in June; in fact, it was the fastest value increase since May 2019. There are many things that may have contributed to this sense of urgency and spike in sales. City residences may be looking for more space for working-from-home environments and remote learning. Also, social distancing is a lot easier in a private single home than it is in a block of townhomes or apartment complexes. Additionally, everyone is racing to lock themselves into a low interest rate, and this will always result in speedy deals.
These conditions, created largely in part by COVID-19, will bring a highly competitive housing market for the winter and spring.
With inventory low, demand high, and rates at an all time low, time is crucial. If you already own a home, you may want to look into refinancing while the rates are this low. If you are looking to sell, setting your price higher could be beneficial since there is such a high demand relative to the low inventory. Buyers could still potentially find themselves in situations where offers are well above their own asking price. If you are a buyer, the balance between patience and putting in an effective offer quickly before anyone else is a tricky dance. Buyers do not have the same selection as they normally would this time of year, and may find themselves in bidding wars.
While buyers and sellers may still be skeptical and have legitimate concerns surrounding the economy and pandemic itself, it seems that taking this risk is worth it – for both sides. With fewer sellers willing to get their homes on the markets, and more buyers looking to settle down into the suburbs, sellers can sell their homes at a premium price while buyers can benefit off the record low interest rates and security in a suburban home.
The overall climate surrounding COVID-19 is overwhelming and unpredictable, and current housing market simply highlights yet another curve ball. It is important to have access to representation in situations relevant to the negotiations and bidding process, title searches, agreements, and contracts, etc. While these normally maybe routine matters, the pandemic has created a world where policies and procedures are flipped upside down, and orders or recommendations are issued or revised frequently. Gaining access to a lawyer for representation can not only ease the process for buyers or sellers, but also help navigate such unchartered territories.