It feels like these days the one thing you can count on is that things are going to change. If you thought back to a year ago, you could undoubtedly name at least three everyday things that look different now than they did then.
So if things as basic as standing in line at the store, going to a ball game, and your own pant size (thank you, quarantine-fifteen) are changing, can’t you assume bigger, more complex things like the real estate market are changing too?
Well, we took this question to the pros and asked three of our seasoned Endorsed Local Provider (ELP) real estate agents to tell it to us straight about what they’re seeing in their markets across the country. Here’s who gave us the rundown:
- Mindy N. – Seattle area, 14 years of experience
- Andy H. – Kokomo, Indiana, 14 years of experience
- James R. – Columbus, Ohio, 17 years of experience
Based on their years of experience in changing markets, these pros talked us through what people who are a little unsure of buying and selling a home right now need to know.
For Starters, What Does It Mean to Be in a “Changing Market”?
In reality, the real estate market is always changing. While there is some predictability to it that allows us to anticipate certain trends, there are also big shifts that can cause the market to take a whole new course for months or even years.
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For example, most of us remember when the home loan industry went sour in 2007–08 and caused the housing bubble to pop. Andy H. from Kokomo, Indiana, actually started his real estate career smack dab in the middle of it. “It was a complete buyer’s market,” he says, “the inventory was saturated,” causing home prices to drop big time.
After that, Andy says, it took a while to level out again, but eventually the market turned around and “year over year since 2013, the average sales price has continued to increase and show signs of a strong market.”
"Year over year since 2013, the average sales price has continued to increase and show signs of a strong market.” — Andy H., ELP
With our economy looking dicey these days, is a big market change bound to happen?
The long and the short of it is, not quite. Most feel that what we’re seeing in the economy doesn’t involve the same housing industry-related issues that caused the ’07 crash, so the impact on the real estate market shouldn’t be as major. In fact, our pros are finding that in their areas, the market is returning in many ways to how it was at the beginning of the year.
What Are the Pros Actually Seeing in the Market Today?
Across the country, the pros we interviewed are seeing a strong seller’s market. Mindy N. from the Seattle area saw a “pause” in activity for a few weeks at the beginning of the pandemic, but now compares where we’re at to the late 2017 to early 2018 market with “the super low inventory, the multiple offers, the over list price” activity.
Even half of a continent away in Columbus, Ohio, James R. is seeing the same thing. “This is one of the best seller’s markets I’ve seen since I’ve been in real estate.” Likewise, Andy thinks it “has actually been one of the best times in my 14 years to put a home on the market if you’re a seller.”
“This is one of the best seller’s markets I’ve seen since I’ve been in real estate.” — James R., ELP
So, why is the market swinging in favor of sellers?
Well, mortgage interest rates have a lot to do with it. Mindy explains, “Part of the reason buyers are buying in such panic and fury is because they can get interest rates in the low 3s, occasionally under 3%. They have a little bit more buying power, so they’re out there using it.”
And she’s not wrong. Rates were trending down even before the pandemic. In May, the average interest rate for a conventional 15-year fixed-rate mortgage (the cheapest type of mortgage and the only kind we recommend) dropped to 2.69%—the lowest it’s been in over seven years!1
In May, the average interest rate for a conventional 15-year fixed-rate mortgage (the cheapest type of mortgage and the only kind we recommend) dropped to 2.69%—the lowest it’s been in over seven years!1
What Does That Mean for Sellers?
Because there are more motivated buyers than sellers, competition is fierce and inventory is . . . not so fierce. Many listings, especially those under $350,000, are going fast and with multiple offers. “Sellers have a very, very strong advantage right now,” Mindy says, “in my opinion, this is about as good as it gets.”
But before you put up the For Sale sign and load your Tahoe with moving boxes, make sure you’re really financially (and emotionally) ready to sell. Then if the green lights are flashing, the next step is to get with your agent and prepare for these common seller’s market scenarios:
- Are you selling and buying? Remember, with low inventory, it may take longer to find a new home than to sell your current one.
- Have a multiple offer game plan. Align with your agent on price, type of financing, and contingencies so that you pick the best offer.
- Higher price point homes aren’t moving quite as fast. If your home’s value is around $500,000 and up, don’t get discouraged if it takes a little bit longer to sell.
What Does That Mean for Buyers?
Just because it’s a seller’s market out there doesn’t mean buyers can’t come out on top too. James points out that “there’s opportunity no matter what environment you’re in . . . but it’s important to have the right tools and the right guidance in this market.”
To win in a seller’s market, buyers need to:
- Consider your time frame. Buying a house is a long term investment. If you don’t plan to stay in a home at least 3 years, you may want to rethink buying it.
- Know what it takes to have a competitive offer. Get preapproved (not just prequalified) for a conventional loan.
- Stick to the budget. Mindy advises, “Do not overextend yourself on what you’re purchasing, ever.” Woman after our own heart, right?
If You’re Thinking About Buying or Selling, Settle In, Folks
The pros all agree that the seller’s market is here to stay a while. Even if interest rates were to jump back up, Mindy predicts “that would slow down the rate at which buyers are buying . . . but when you have inventory this low, it takes a while to build back.”
Remember though, real estate is regional. While we think that similarities between the different markets we mention here might represent the norm, it’s best to ask a pro in your own area what’s up.
Take Control With a Trusted Pro
As Andy says, “An agent’s job is to educate buyers and sellers so that they can make the best sound decision for their family,” and we couldn’t agree more.
That’s exactly why we endorse rock star agents in our nationwide Endorsed Local Providers (ELP) program. Our real estate ELPs are top-performing professionals in your market who’ve earned our trust by actually caring about your financial goals. They’ve weathered the market’s varying storms and are the only pros we recommend to help you crush your next move.