At the start of the coronavirus pandemic last March, the course of the U.S. housing market seemed anything but safe to assume. There were concerns about how to show homes and whether potential buyers would shrink away for fear of their financial security.
But as 2020 played out, it became abundantly clear that America’s appetite for houses was as insatiable as it was leading into the crisis. Sustained low interest rates have motivated buyers who otherwise might be tentative about commitments.
The National Association of Realtors recently reported that existing home sales surged by 22% in 2020, including single-family homes, townhomes, condos and co-ops.
That trend was picking around the close of last year, with sales increasing 0.7% in December over November, a month that was already unseasonably high in transactions, according to Realtor Magazine.
Analysts believe this demand is only going to continue into the new year.
“Although mortgage rates are projected to increase, they will continue to hover near record lows at around 3%,” said Lawrence Yun, NAR’s chief economist. “Moreover, expect economic conditions to improve with additional stimulus forthcoming and vaccine distribution already underway.”
What’s working in the favor of home sellers is that U.S. housing inventory remains low. The demand remains because of the enticing interest rates, but the supply isn’t keeping up. Ultimately, it’s producing major competition.
Across all housing types, the median existing-home price in December was up to $309,800. That’s an increase of nearly 13% over December 2019. And home prices rose in every major region of the country.
The upward trend is a real reflection of the pressure on inventory. Total housing available amounted to 1.07 million existing units in December, a 23% decline compared to the previous year.
“To their credit, homebuilders and construction companies have increased efforts to build, with housing starts hitting an annual rate of near 1.7 million in December, with more focus on single-family homes,” said Yun. “However, it will take vigorous new-home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand.”
For a home seller, that means the coming year could be a golden opportunity before new construction can catch off and siphon off competition from buyers.
Listing your property early in the year could fetch big offers from the jump. The demand is there, and a bidding war may ensue.
The important thing for sellers to understand is that they should be prepared for similar competition if they look to buy a house themselves, even if they’re downsizing. First-time buyers accounted for just under a third of all home sales in November and December of last year, making certain price points particularly competitive.
If you’re looking to sell your home in the near future, make sure you take some time to research your current and future neighborhood where you hope to buy. There is a rare window in early 2021 that may prove very beneficial to those who do their homework.
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