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An important metric in today’s residential real estate market is the number of homes available for sale. The shortage of available housing inventory is the major reason for the double-digit price appreciation we’ve seen in each of the last two years. It’s the reason many would-be purchasers are frustrated with the bidding wars over the homes that are available. However, signs of relief are finally appearing.
According to data from realtor.com, active listings have increased over the last four months. They define active listings as:
“The active listing count tracks the number of for sale properties on the market, excluding pending listings where a pending status is available. This is a snapshot measure of how many active listings can be expected on any given day of the specified month.”
Historically, housing inventory increases throughout the summer months, starts to tail off in the fall, and then drops significantly over the winter. The graph below shows this trend along with the month active listings peaked in 2017, 2018, and 2019.
Last year, the trend was different. Historical seasonality wasn’t repeated in 2020 since many homeowners held off on putting their houses up for sale because of the pandemic (see graph below). In 2020, active listings peaked in April, and then fell off dramatically for the remainder of the year.
Due to the decline of active listings in 2020, 2021 began with record-low housing inventory counts. However, we’ve been building inventory over the last several months as more listings come to the market (see graph below):
There are three main reasons we may see listings continue to increase throughout this fall and into the winter.
If you’re in the market to buy a home, stick with it. There are new listings becoming available every day. If you’re thinking of selling your house, you may want to list your home before this additional competition comes to market.
In today’s sellers’ market, standing out as a buyer is critical. Multi-offer scenarios and bidding wars are the norm due to the low supply of houses for sale and high buyer demand. If you’re buying this fall, you’ll want every advantage, especially when you’ve found the home of your dreams.
Below are five things to keep in mind when it’s time to make an offer.
Knowing your budget and what you can afford is critical to your success as a homebuyer. The best way to understand your numbers is to work with a lender so you can get pre-approved for a loan. As Freddie Mac puts it:
“This pre-approval allows you to look for a home with greater confidence and demonstrates to the seller that you are a serious buyer.”
Showing sellers you’re serious can give you a competitive edge. It enables you to act quickly when you’ve found your perfect home.
Speed and the pace of sales are contributing factors to today’s competitive housing market. According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the average home is on the market for just 17 days. As the report notes:
“Eighty-nine percent of homes sold in July 2021 were on the market for less than a month.”
When homes are selling fast, staying on top of the market and moving quickly are key. After you’ve worked with your agent to find the home that suits your needs, they’ll help you put together and submit your best offer as soon as possible.
No matter what the housing market looks like, rely on a trusted real estate advisor. As Freddie Mac says:
“The success of your homebuying journey largely depends on the company you keep. . . . be sure to select experienced, trusted professionals who will help you make informed decisions and avoid any pitfalls.”
Agents are experts in the local real estate market. They have insight into what’s worked for other buyers in your area and what sellers may be looking for in an offer. It may seem simple, but catering to what a seller may need can help your offer stand out.
In the past, offering at or near the asking price was enough to make your offer appealing to sellers. In today’s market, that’s often not the case. According to the latest Realtors Confidence Index from NAR, 50% of offers are above the list price.
In such a competitive market, emotions and prices can run high. Having an agent to help craft a strong, fair offer is critical in these situations. Your agent can help you understand:
When crafting an offer, you’ll want to keep both your best interest and the interest of the seller in mind. Your trusted real estate advisor will help you consider which levers you could pull, including contract contingencies (conditions you set that the seller must meet for the purchase to be finalized). Of course, there are certain contingencies you don’t want to give up, like the home inspection.
Freddie Mac explains:
“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”
Today’s competitive housing market makes it more important than ever to make a strong offer on a home. Let’s connect to make sure your offer rises to the top.
Even though experts agree there’s no chance of a large-scale foreclosure crisis, there are a number of homeowners who may be coming face-to-face with foreclosure as a possibility. And while the overall percentage of homeowners at risk is decreasing with time (see graph below), that’s little comfort to those individuals who are facing challenges today.
If you haven’t taken advantage of the forbearance period, it may be time to research and understand your options. It starts with knowing what foreclosure is. Investopedia defines it like this:
“Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. Typically, default is triggered when a borrower misses a specific number of monthly payments . . .”
The good news is, there are alternatives available to help you avoid having to go through the foreclosure process, including:
But before you go down any of those paths, it’s worth seeing if you have enough equity in your home to sell it and protect your investment.
Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.
In today’s real estate market, many homeowners have far more equity in their homes than they realize. Over the last year, buyer demand has been high, but housing supply has been low. That’s led to a substantial increase in home values. When prices rise, so does the amount of equity you have in your house.
According to CoreLogic, on average, homeowners gained $33,400 in equity over the last 12 months, and the average equity on mortgaged homes is now $216,000 (see map below):
So, what does that mean for you? Over the past year, chances are your home’s value and therefore your equity has risen dramatically. If you’ve been in your home for a while, the mortgage payments you’ve made over time chipped away at the balance of your loan. If your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.
Frank Martell, President and CEO of CoreLogic, elaborates on how equity can help:
“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market.”
To find out what your house is worth in today’s market, work with a local real estate professional. We’ll be able to give you an estimate of what your house could sell for based on recent sales of similar homes in your area. Since home prices are still appreciating, you may be able to sell your house to avoid foreclosure.
If you find out that you have to pursue other options, your agent can help with that too. We’ll be able to connect you with other professionals in the industry, like housing counselors who can look into your unique situation and offer advice on next steps if selling isn’t the best alternative.
If you’re a homeowner facing hardship, let’s connect to explore your options and see if you can sell your house to avoid foreclosure.
When it comes to the latest news in real estate, there are a lot of sensational headlines in the media. In times like this, when it can be hard to know what to believe, put your trust in the experts. Those of us in the housing market respect that buying or selling a home is a major life decision, and we offer advice based on what the data shows.
Despite what you may have read, the housing market is still undeniably strong. Here’s a look at what leading experts have to say about buyer demand today and how it continues to shape the industry:
“In general, there are definite signs of cooling demand. However, buyer traffic is still at historically high levels compared to pre-pandemic showings.”
“Seasonally adjusted purchase applications tick up slightly to the highest level since July. Demand for homes remains strong and steady. Excluding 2020 (not a good benchmark) purchase applications are the strongest in a decade.”
“Home buyer demand pushed price growth to a new record high in June, with S&P CoreLogic national Case-Shiller Index clocking in an 18.6% year-over-year growth rate. The month-to-month index jumped 2.18%, making it another strong monthly growth, and the fastest May-to-June increase since the data series began.”
As a seller, buyer demand is an important factor that helps influence how fast your house will sell and how many buyers may be competing for it. When buyers have to compete against each other for a limited supply of available homes, bidding wars can drive prices up. While things have cooled slightly since the peak of the pandemic housing rush, buyer demand is still far surpassing historical norms. That’s why we’re still in a sellers’ market.
If you’re torn on whether or not you want to sell your home this year, rest assured it’s still a great time to make a move. Let’s connect to discuss how you can sell now and do it on your best terms thanks to today’s buyer demand.
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