This was Unexpected
Many industries have been devastated by the economic shutdown caused by the COVID-19 virus. Real estate is not one of them.
Mark Fleming, Chief Economist for First American, just reported:
“Since hitting a low point during the initial stages of the pandemic, the only major industry to display immunity to the economic impacts of the coronavirus is the housing market. Housing has experienced a strong V-shaped recovery and is now exceeding pre-pandemic levels.”
Buyer demand is still strong heading into the fall. ShowingTime, which tracks the average number of buyer showings on residential properties, just announced that buyer showings are up 61.9% compared to the same time last year. They went on to say:
“Normally, real estate activity begins to slow down in the late summer, but this year it peaked in July, August and into September.”
The One Big Challenge for Buyers
The market is running out of available homes for sale. Just last week, realtor.com reported:
“Since the beginning of the COVID pandemic in March, nearly 400,000 fewer homes have been listed compared to last year, leaving a gaping hole in the U.S. housing inventory.”
The National Association of Realtors (NAR) revealed that, while home sales are skyrocketing, the inventory of existing homes for sale is dropping dramatically. Below is a graph of existing inventory (September numbers are not yet available):Homebuilders are increasing construction, but they cannot keep up with the high demand. Bill McBride, founder of the Calculated Risk blog, in discussing inventory of newly constructed houses, notes:
“The months of supply decreased to 3.3 months…This is the all-time record low months of supply.”
What this means for you if you’ve got a house to sell
If you’re thinking of putting your home on the market in the spring, you might consider this—you will be able to negotiate the best price for your current home when demand is high and supply is limited. That’s today’s opportunity in the real estate market.
Next year, when the pandemic is hopefully behind us, there will be many more properties coming to the market. Don’t wait for that increase in competition in your neighborhood. Now is a great time to sell.
Getting the most for your home now means you can take advantage of historically low interest rates on your next home purchase. If finding your ideal home is a challenge because of the lack of inventory, you might consider building exactly what you want. This takes some time, yes, and may mean you live in a rental or stay with relatives for a time, but in the long run, you get the home that best suits your needs while getting the best price for your current home.
If you’re in a position to sell your home today, you can take advantage of this unique market that strongly favors sellers. Low supply of homes and high demand from buyers means you will likely get more for your house than if you waited.