No one could have predicted the impact that the pandemic would have on everyone during 2020. The housing market was no exception to these changes. At the beginning of this pandemic, the real estate market took a hit due to the hesitation of many to buy a home when the economy and job market as uncertain as it was. Most states went into quarantine and homes couldn’t be shown.
Our research shows that, at this time, most housing markets heavily favor those looking to sell their home.
Continuing to be a Seller’s Market
In 2020, the trends that we have seen in housing markets in the United States could easily be described as a seller’s market. With such a small amount of active listings available, and more and more people looking to purchase a home, it led to housing market booms happening in cities across the United States.
Listed homes are being swept off the market even faster than they have in the past. This is part of what has led to such an extremely competitive seller’s market. These trends have kept up into 2021 and appear to be what will continue as we head into the rest of the year.
As we all came to understand just how serious the pandemic was, many were unsure of what would happen to the economy and job market as time went on, so quite a few people were hesitant to buy a home. This ended up in a significant dip in the real estate market during the start of the pandemic in America, which occurred around March of 2020. This ended up putting a major stoppage on the real estate market and prevented people from showing their home during this time. This fall in the market resulted in mortgage rates dropping to an all-time low.
Freddie Mac ran a survey and discovered that mortgage rates have been at record lows ever since the early part of the summer of 2020. These rates hit another record-low, in January of 2021, at 2.65% which is the lowest reported rate since they began tracking this data all the way back in 1971.
So far, this has risen a total of 3.04% as of April 2021 and many expect these rates to continue making small increases as time goes on. An increase in people interested in buying homes has resulted as people look to take advantage of the opportunity of having such a small mortgage rate.
There have been consistently very little homes on the market, but this has not caused people to shy away from buying. Since mortgage rates have dropped so far down, the demand for buying homes has shot up. Supply has not been able to keep up with such a high demand, creating a highly competitive seller’s market.
Homes are getting sold quickly. In fact, they are getting sold at record speeds. This means that those looking to purchase a home have to put in a great offer quickly. In a lot of places, including Cincinnati, a home listed will have half a dozen offers by the end of the week. Many of these offers will be at listing price or better.
In March 2021, houses for sale were moving off the market 6 days less on average than they were this time last year. There are no signs that the inventory for homes on the market will be increasing soon, which means that those that are on the market will continue to be sold quickly, as there will still be more demand than supply.
Inventory of homes on the market has dropped a total of 52% compared to the previous year, as of March 2021, and it appears that a low number of homes will be entering the market. Due to the the spike in demand, which was a result of the lower mortgage rates, supply isn’t able to keep up with what people want.
This limited supply will work in the seller’s favor during homebuying negotiations.
The economy finally has begun trending upwards and has gained a stability that it has not had in some time, coming alongside the distribution of the COVID-19 vaccine.
With the continuous rise of the economy, the job market has begun opening. In February of 2021, there have been around 380,000 jobs created. Unemployment rates have dropped, as well, coming in now at about 6%, which is less than half of the unemployment rate in April of 2020. With more people employed, they are now able to buy a home, which they couldn’t before without the stable income of a job.
More Working from Home
Remote working wasn’t very popular in most industries before the pandemic. Even after some have returned to work in the office, more and more businesses are looking to rightsize their office or even not have a permanent office and get temporary workspaces instead. This would mean having their employees work remotely full-time or work partially from home.
This means that many people don’t have to worry about their commute to work, as much or at all, when looking for their new home. In some cases, they may not even need to live in the same city as their work is based in, or even state.
Redfin found in a December of 2020 survey that 67% of home buyers and sellers have either moved to a different city already or would be interested in moving to another city due to remote working.
A Rise in Median Home Prices
Due to these factors, median home prices have been and are continuing to rise, all across the United States, including in Cincinnati. According to research from Norada Real Estate Investments, the median home was priced at $370,000 in Mach of 2021, which is 15.6% higher than March of last year.
The National Association of Realtors predicts that prices for houses are likely to go up 8% in 2021. This means that the median price for homes trending upwards is only expected to continue in response to supply staying low or dropping further and demand continuing to increase.
If you’re looking to sell a home, this may be your best time. Trends are pointing towards a continuation of what happened in 2020, though perhaps at a lesser scale. The low home inventory, which may get even lower as time goes on, paired with high demand stemming from low mortgage rates are going to lead to even higher median prices.
Be prepared for competition if you’re looking to buy a home. Remember that it’s a seller’s market and that you have to be quick with your offer and hit or even go over the listing price.