If you’re planning to sell your home, let us just extend a hearty “congratulations” to you, as chances are you’re going to be receiving a significant return on your initial investment.
As you probably already know, the housing market is absolutely white-hot right now — if you’re a seller, that is. If you’re a buyer, you can prepare to do your best to out-bid your competition, which you can be certain will be plentiful.
In fact, according to real estate experts, home prices have increased by an average of 16 percent from last year. In some areas of the country, value is up more than 20 percent. And what’s really driving this sizzling seller’s market is that inventory is limited. In fact, the number of homes that are for sale is down about 30 percent from what it was around this time one year ago. It’s leading to all-out bidding wars, and often it’s the buyers who are willing to pay cash or meet the difference between their initial offer and whatever the appraisal comes in at that have their offers accepted. It’s a great position for a seller to be in as inventory has dwindled, yet the number of buyers has grown.
Should You Buy or Wait?
Having read that first section, you’re probably inclined to wait until the market cools off a little rather than dip your toes into the bidding war. But that will likely come with a caveat as well. For instance, if you wait, you may see the market stabilize and not have to fight tooth and nail for a property that you like. But you also may be subject to paying higher interest rates on any mortgage loan that you take out.
Another thing contributing to the large number of homebuyers right now is the historically low interest rates on mortgage loans — but that certainly isn’t going to last forever. It’s why experts are advising buyers to continue shopping now if they’re comfortable paying a little bit more for the property. Some experts are saying interest rates are likely to begin ticking up again in the second half of 2021.
Is Inventory Likely to Increase?
It’s hard to say. It’s estimated that more than 2.5 million homeowners are in forbearance with their lenders and not likely to sell. Millions more are likely content with their current living situation and perhaps even took advantage of historically low interest rates to refinance to lesser monthly payments or shorter loan terms over the course of the past year. This latter group of homeowners isn’t likely to be selling anytime soon, either.
The one thing that could help increase inventory is the pace of home building, however, even that is murky. For one, home building has been lagging. And two, material prices have skyrocketed, leading to cost increases that many prospective homeowners don’t want to take on.