Will Housing Increase in 2021?
If you’ve been following the real estate market, you probably know that it has been many months since buyers and sellers enjoyed anything like business as usual. Record-low interest rates and pandemic-driven demand has led to record-low inventory in markets both large and small. Now, however, we may be able to envision a return to a real estate market that’s a little more like normal.
According to Realtor.com’s June 2021 housing data, while homeowners are still listing their homes at a lower rate than previous years, June listings were up both month over month (10.9 percent higher) and year over year (5.5 percent higher). This is in contrast to the trend we normally see of listings going down from May to June.
This is a promising indicator that with the widespread adoption of COVID vaccines and a return to pre-pandemic lifestyles and activities in many markets, more homeowners may finally be ready to put their homes on the MLS, easing the bottleneck that has developed over the past year and a half. That’s good news for buyers, many of whom may have been frustrated by overheated and competitive purchase processes over that same time period. How will increased housing inventory impact sellers? If you’re like many homeowners, over the past few months you may have been waiting for some indication that your neighbors were selling before you decided to put your own home on the market. If so, June’s housing numbers may have provided the wake-up call you were looking for. If you’re now thinking about selling your home, here are some of the market changes you can expect to see.
Reassurance that you’ll be able to buy Many homeowners who wanted to upsize, downsize, or move to a new market were reluctant to list their home for sale, fearing that they would be unable to buy on the other side of the transaction. However, as inventory improves it may be time to start looking at available homes in your chosen neighborhood and to talk with your real estate agent or broker about a buyer strategy.
Greater need for marketing The compressed timeline and multiple offer environment of the past few months may have made many homeowners complacent about marketing their property, foregoing photography, in-person showings, and other common marketing strategies based on the certainty of a fast sale. Now sellers will need to expect a more traditional marketing approach, including decluttering and preparing the home for open houses and showings, as well as staging, photography, and video tours. More days on the market While many homeowners rejoiced in overnight sales over the past few months, newly increased inventory may mean more days on the market before a ratified contract. This can be good news, since pent-up demand may mean that those extra days have the potential to generate increased interest and above-asking sale prices.
More need to negotiate If you’ve grown accustomed to as-is, no-questions-asked home sales in your market, it may be time to recalibrate your expectations. With more inventory, buyers may be less willing to forego home inspections and to accept major property defects as a necessary cost of doing business. While you still may not see negotiations on price, expect to negotiate on timeline or on needed repairs.
How will increased housing inventory impact buyers? Whether you’ve delayed your home buying plans to wait out the market or were frustrated during previous negotiations, increased housing inventory may make the next few months ideal for moving forward. Here are some of the ways more homes for sale can improve the process for you. Less competitive purchase environment We’ve heard all the wild stories of poorly maintained homes in desirable neighborhoods selling within hours for tens of thousands over asking price with dozens of offers. With more inventory, we should see fewer of these situations and a return to a more normal sales cycle. While there may still be multiple offers and homes selling for above asking price, the overwhelming speed and competitive pressure should be somewhat alleviated.
Renewed ability to negotiate Over the past few months, multiple offers and an active seller’s market meant that there was little or no room to negotiate with homeowners. As the market opens up, we may see fewer offers and more days on the market, providing buyers with a reasonable opportunity to ask for sensible concessions, like needed repairs or timelines that work for both parties.
Renewed focus on contingencies Over the past months, many hopeful buyers have found themselves struggling with decisions surrounding contingencies like those related to the home inspection or financing. They worried that by asking for the protection of contingencies they would undermine their bargaining power. A return to more normal market conditions may mean that buyers can decide what strategy makes sense for their particular situation and ask for what they need without fear of blowing the deal.
More stable home values While many sellers have rejoiced as they watched their home values skyrocket, many buyers watched these same trends with increasing alarm. In some cases, buyers were priced out of their chosen markets and home styles again and again as values increased. Now, however, a return to more normalized inventory may mean that buyers can crunch the numbers with a reasonable expectation of staying on track with their homebuying budget.
Whether you are a buyer or seller, you need to begin discussing next steps with a trusted real estate professional. Now more than ever, an agent can help you understand trends in your market and develop a strategy to assist you in reaching your real estate goals in the months ahead.