This past March we were faced with a brand-new pandemic. Locked down in our homes, with businesses closed, our lives were put on hold. With so much uncertainty, who knew we would end the year with one of the hottest real estate markets in the country?
The Market is Relentless
The year has ushered in a remarkable seller’s market. As the number of new listings continue to shrink, buyer demand has remained a constant. The statistics from 2020 tell a tale of insatiable buyer demand. In November 2019 there were 12,913 active single-family homes on the market. This November, home inventory is down 63 percent from the previous year.
With just 5,395 single family homes for sale in the metro area, prices have not only held strong, but have continued to rise through the pandemic. In fact, the median closing price has been higher than the median asking price for the last four months. This November, the median sold price was $481,000, more than three percent over the median asking price of $465,000.
Where are the Sellers?
With potential sellers on the sidelines, the lack of inventory has been instrumental in driving home values to record highs and forcing buyers to compete for fewer and fewer homes. In the midst of an extreme seller’s market, with homes selling in days at well over asking price, where are the sellers?
While this is an optimum time to sell, there are a couple of factors that are likely keeping homeowners from putting their properties up for sale.
There is a seasonal home selling cycle that is relatively consistent each year. Buyers start looking for their next home in the Spring, maintain the activity through the summer, taper off into the Fall and become generally quiet in the winter months, until the cycle repeats itself. But this year has been an exception. The Spring season started late, not really kicking in until June, and ran hot all the way through fall. Buyers have been active for months, yet sellers have stayed more in line with the traditional season.
For sellers, the uncertainty has provided a lot of reason to stay put, even with the enticement of record high profits. The national election, civil unrest, and ongoing Covid concerns, sellers are inclined to wait for things to feel more normal.
Interest Rates Lure Buyers
Buyers on the other hand have record low interest rates helping to drive their desire to invest in a new home. This is a factor that will likely last through 2021. The Fed has been very clear that there are no interest rate increases on the horizon.
Covid Strikes Again?
The recent surge in Covid-19 cases has caused the local government to begin applying stiffer restrictions, some of which affect real estate agents and their ability to show homes. We know from the first shut down that some buyers are willing to enter into contracts with only virtual tours of the property, but not everyone is comfortable with this type of sale. If the virus continues to spread, the result will be a slowing in the real estate market.
As we find ourselves in the holiday season, the market should continue to slow, but will remain a strong seller’s market. It is likely that going into the new year we will get back on track with the typical real estate sales cycle and see the next listing surge next Spring.
