The New Normal of Selling a Home Today, Explained
Link to full article by Erica Sweenry is here!
If you’re selling your home right now—or thinking about doing it soon—you should know that today’s housing market is unlike anything we’ve seen or experienced lately, maybe ever.
In the past, home sellers might have waited weeks or months to get an offer that might not be as high as they’d hoped. Buyers may have lowballed, or driven a hard bargain asking sellers to make certain repairs or other concessions before closing the deal.
Today, however, many of these realities are no more: In many areas of the country, homes are getting snapped up fast, sometimes within days of going on the market. Buyers mired in bidding wars are pushing their offers over asking price, and often waiving inspections and other demands to sweeten their offer.
In general, this is all good news for sellers—but it also means that it’s more important than ever to understand the market and play your cards carefully to fetch the best offer and terms for you. Here’s what sellers need to know about the real estate landscape today.
How the COVID-19 pandemic is affecting the housing market today
The COVID-19 pandemic has changed so much of our lives, and real estate is no exception.
“We’ve all been through a hopefully once-in-a-lifetime experience that dramatically changed the way we lived, worked, and went about our daily lives,” says Realtor.com Chief Economist Danielle Hale. “Even as we move forward and get back to living the way we used to, it’s likely that these experiences will stick with us and shape the way we make decisions for years into the future.”
For one, pandemic lockdowns made many people realize that their current living spaces just aren’t working for them anymore.
“One of the major motivations of homebuyers is the desire to have a larger, more functional home,” says Jason Gelios, a real estate agent with Community Choice Realty in Southeastern Michigan.
This is particularly true for people who started working remotely during the pandemic—who, after cramming their desks into dining rooms, “cloffices,” and other corners, are ready to upgrade to a bigger house so they can work at home with more privacy and comfort.
“This allows for people who are permanently remote-working to be more productive in their home,” explains Gelios.
And since remote workers may no longer need to commute to the office often or at all, many are now house hunting in areas that they hadn’t previously considered.
“With remote work flexibility becoming the new normal, buyers sought out areas like South Florida where they could enjoy the outdoors, extra space, and the tax benefits that come with living here,” says Chad Carroll with The Carroll Group at Compass, in South Florida.
Home inventory is low
Although buyers are out in droves, there are many fewer homes on the market than usual—which is creating a highly competitive market for buyers nationwide.
“Sellers are benefiting from the historically low inventory levels and record demand,” Carroll says. “This combination has fueled bidding wars and led to properties going under contract at an insane velocity.”
These low-inventory conditions may improve somewhat over the next year. But Hale warns, “the market is so out of balance that even with improvement, the number of homes for sale will remain low.”
Home prices are high
With fewer homes and high demand for them, many sellers are seeing multiple offers that, in turn, are driving up prices.
“The ongoing increase in housing prices makes it a great time for a home seller to cash out on their homes now,” says Beatrice de Jong, consumer trends expert at online real estate transaction company Opendoor.
Often, buyers are making offers above the listing price.
“Faced with few homes available for sale, buyers intent on owning are pulling out all the stops,” says Hale.
However, this highly beneficial market for sellers comes with a big caveat if selling means you’ll need to buy a new home yourself.
“Sellers searching for their next home will face the same fierce competition,” warns de Jong.
What’s more, home prices are seeing some early signs of leveling off—or at least not be rising at the breakneck pace of the past. So if you want to sell at the top of the market, it may pay to list sooner rather than later.
Interest rates are at record lows
Even though home prices are high, mortgage interest rates have hit record lows. And since even a 1% lower interest rate could lower monthly mortgage payments by up to 20%, it make homes more affordable for buyers, which is driving them into this competitive market.
“While the cost of a home is on the higher side, the cost to obtain the financing is much lower and oftentimes offsets the higher price, spurring a huge demand for buyers to go out and shop for homes,” Gelios says.
It’s a seller’s market
“There are many ways to define a seller’s market,” says Hale. “But a few key hallmarks are limited availability of homes for sale, fast-selling homes, rising home prices, and competitive buyer offers such as offers over asking price, waiving contingencies, and flexible closing terms.”
All that said, most buyers are looking for a new home because it’s the right time for them—not because of market conditions.
“They’re getting married, moving in with a partner, expanding their family or planning to do so,” Hale explains.
And the same wisdom applies to deciding whether to sell your house: Even though market conditions are in your favor, you should make sure it’s the right time to sell your house for you. Weigh your own personal circumstances, including any current or upcoming life changes such as a new job, retirement, the arrival or departure of family members within the home, and more.