If you're planning to sell your home in the near future, it's crucial to recognize that today's housing market is unprecedented and unlike anything we've witnessed in recent memory, and perhaps ever before.
Only a few years ago, home sellers might have waited for weeks or months to receive offers that may not have met their expectations. Buyers might have made low offers, bargaining hard and asking sellers to make repairs or other concessions before closing the deal.
However, the COVID-19 pandemic has had a profound impact on every aspect of our lives, including the real estate industry. The pandemic led to a surge in home buying, as Americans were released from the constraints of daily commuting to offices. As a result, properties in many regions of the country were selling rapidly, often within days of being listed on the market. Bidding wars were commonplace, with buyers frequently offering more than the asking price and sometimes waiving inspections and other requirements to improve their odds.
At that time, this was excellent news for home sellers on the market. However, the game has shifted once more as the pandemic has receded.
Therefore, it is now more crucial than ever to understand the current real estate market and to make strategic decisions that will allow you to obtain the best possible offer and terms for your property. Here's what home sellers should know about the real estate landscape today.
Impact of COVID-19 on the Housing Market
According to Danielle Hale, the Chief Economist of Realtor.com®, the COVID-19 pandemic has been an unparalleled experience that has significantly impacted the way we live, work, and make decisions.
The lockdowns imposed during the pandemic prompted many people to reassess their living spaces, which they discovered were no longer meeting their needs. As Jason Gelios, a real estate agent with Community Choice Realty in Southeastern Michigan explains, one of the primary drivers of homebuyers is the desire for a larger, more functional home, especially for those who started working remotely during the pandemic. These individuals, who previously made do with cramped spaces like "cloffices" or converted dining rooms, now require larger homes to work comfortably and productively.
This shift towards remote work has opened up new opportunities for homebuyers to explore areas that they had not previously considered. Remote workers no longer have to commute to the office regularly or at all, making it possible for them to seek out regions with better outdoor amenities, more space, and tax benefits. Chad Carroll with The Carroll Group at Compass in South Florida notes that areas like South Florida have become popular with buyers due to these factors.
High Home Prices in the Current Housing Market
The current housing market offers great news for home sellers, as home prices are at an all-time high. In June, the median list price hit a record high of $449,000. Though it decreased to a median of $417,000 in November, it is still much higher than it was a year ago. This increase in home prices has led to record-high levels of homeowner equity.
While this is an excellent opportunity for home sellers to cash out on their homes, there is a significant caveat. If sellers plan to purchase a new home, they will be facing similarly high prices, coupled with rising mortgage rates. As Beatrice de Jong, a consumer trends expert at Opendoor, warns, this may not be advantageous for homebuyers.
Rates Have Skyrocketed
The current scenario indicates that interest rates have increased significantly, resulting in a surge in mortgage rates from the previous range of 3% to 7%.
Consequently, numerous potential homebuyers are facing difficulties in securing loans to purchase homes, leading to a reduction in demand. Moreover, homeowners who had previously obtained low-interest-rate mortgages may opt to stay in their homes instead of selling them and incurring higher rates for a new home. Nevertheless, a few homeowners may still choose to sell their properties for other reasons.