Purchasers were opting for cities and close-in suburbs for some time now, looking for a better life for them and their families – shorter commutes and easier access to cultural happenings. But how did the pandemic affect this?
In 2020, a lot of people moved from the city to the suburbs. They’re all looking to get some more space while in lockdown. Telecommuting was one of the things that made this possible. According to CPA’s American Institute questionnaire, 42 percent of working US citizens worked remotely at some point during the coronavirus lockdown. Firms like Twitter actually said they will be giving workers the freedom to work so indefinitely!
This all means that some people who were living in a smaller space in the city could now move to a bigger house. Sure, a couple of hours away, but more affordable and located in an area with more nature! Real estate agents saw this happen. The demand is heightened to an extent where agents are calling about neighborhoods. They’re struggling to find out about houses before they get listed no the marketplace.
And in the meantime, apartments in the cities are sitting idly on the marketplace. Why? People aren’t as eager to live so close to other people.
Sellers Got the Upper Hand
For small-town and suburban sellers, this is a godsend situation. Amy and Brian Staunton sold their three-bedroom former home in Carmel, Indiana. The city boasts around 100,000 residents. They sold their house for 25,000 dollars over the listed price in just one day! The sale occurred at the end of 2020, and the pair got 5 offers. One of them was a bid where the purchaser didn’t even bother seeing the house live before placing a bid. That was the bid they picked.
The Staunton’s have three kids, ages 1 to 7, and they upsized to another house just down the street. They wanted to stay in the same school district that suited them.
If you’re on the other side of the spectrum – a person looking to purchase away from your city and close-on suburb – you’re likely struggling. Malia and Andy Reuben lived near Atlanta and had troubles trading up to a home in Dallas. The property suited all of their needs, including a backyard and need for bigger space. They bid 6,000 USD over the listed price and beat out seven other bidders, buying a house for 445,000 dollars.
We’re in the middle of a pandemic. Even so, the prices of houses in the States actually climbed to new heights in 2020. The average country-wide sale price for existing properties got to 310,800 USD in November. This means this was the 105th consecutive month of y-to-y profits.
A number of cities experienced price growth in double numbers! Among those who profited the most were small towns and enclaves near big urban areas.
Those seeking to buy a suburban homes had struggles due to low supply of offers, while sellers were free to pick among a number of offerors who were locked in a bidding war. Unsold inventory got to a 2.3-month supply in November – a slump from 3.7 months a year before. Your average property would sell in twenty one days in November 2020!
This is a totally different situation that the one we had during the crisis of 2008 – people were losing properties in droves then. The government clearly learned something from past mistakes and rolled out programs that lowered the consequences of the pandemic on those who own homes.
Moreover, mortgage rates hit new record low levels! The median thirty-year rate sunk to 2.65% at the start of 2021. A sub-three percent mortgage rate is nearly unseen, so we’re charting new territory here! These new small mortgage rates means more people are now able to buy their first home or trade up for a bigger one.
What Awaits Us in 2021
All the biggest real estate sites are forecasting modest house price profits in 2021. Redfin’s experts are saying that these steadily growing mortgage rates, along with a jump in new listings, will lead to a country-wide median price jump of five percent. On the other hand, Realtor’com’s leading employees are forecasting 5,7 percent. They think we will see more sellers in the marketplace, particularly in the other half of 2021, when the vaccine rollout really takes off.
According to Zillow’s Chris Glynn, an expert economist there, house price appreciation will go over ten percent in certain areas of the States. Why? Millennials are finally getting a chance to be first-time home purchasers. About time.
What about prices for newer homes? Well, previous November, the average selling price for freshly-constructed single-family properties was 335,300 dollars. For this year, one can expect a further climb up, but at a slower rate. According to some, the prices of new properties need to climb due to construction expenses going up. Property constructors are very much aware that they can’t raise the prices of houses too fast, since people won’t be buying them then.
Even with some house price profits, the lower rates for mortgage could assist keep properties at some affordable levels for those buying for the first time in 2021. Some believe that thirty-year rates will finish off the year at 3.3 percent, which is a small level supportive of the marketplace.
Advice for Purchasers
If you’re aiming for lower mortgage rates – you better strive to buy a house earlier in 2021, prior to the moment when rates jump up. But, as we go into 2021, we will probably see a bigger supply of houses on the marketplace. So you should wait a bit if you don’t see something you like at the moment.
If you’re buying a house, it’s really significant that you pick out a budget and stick to it, in a realistic way. On the other hand, be aware that purchasers need to place a bid over the listing’s price in order to beat out competition. So don’t think that the conditions of the marketplace at the moment will allow you to strike a deal. Sellers are the one running the show at the moment, since demand is so high.
Since houses are getting snatched left and right, you need to act quick and get mortgage preapproval prior to placing a bid offer. The marketplace is so competitive that there’s nearly no point in going to open houses if you don’t have preapproval.
When calculating the expenses that owning a home brings with itself, don’t count in just your mortgage payments, but calculate in things like homeowners association expenses, equipping a house, landscaping expenses and a rainy-day fund for things such as natural disasters.
Advice for Sellers
As a seller, you should strive to list your house in the first six months of 2021. This means you will be ahead of the curve and the heightened supply offer, when purchasers actually have a bigger selection of houses to pick from.
What will make your house stand out? Well, not just professional-looking pictures – set up virtual tours, declutter the house, arrange furniture in a modern and strategic way, et cetera.
Sure, staging the rooms can be a costly thing if an expert does it – the costs can be 500 dollars each month! But it pays off – such houses sell more quickly and snatch higher offers. Thankfully, some agents count in staging as a regular service.
And believe us, a little can go a long way! What do we mean by this? Well, just some fresh carpeting or paint can breathe new life into a room and hike up the overall price and desirability of the house you’re selling!
If your house has some real estate characteristics that are popular at the moment, like eco-friendly appliances, a backyard and smart home gadgets, then it will probably be more desirable.
Always list your house at a number just a bit over the marketplace value in order to attract lots of purchasers.
Qualify for the Best Mortgage
Smaller mortgage leads to smaller monthly loan payments and paying less in interest as time goes by. How can you score a smaller mortgage rate>
- Ensure that your credit score is up to snuff
- Up your down payment
- Comparison shop.
How to Win a Bidding War
This may come as a surprise, but it’s not always the biggest bidder that wins. There are a lot of other factors to calculate in:
Making a cleaner offer – This is a tactic where you lower your requirements in order to win over the seller. It’s a double-edged sword, since you can get yourself in a risky situation in that way. Strive for a pre-inspection prior to submitting an offer. Some buyers are waiving home appraisal contingencies, and this mostly means making an all-cash offer.
Have an old-school approach – Try writing a heartfelt letter to the homeowner in order to appeal to their emotions. There have been instances where sellers opted to those buyers who detailed out their struggles to score a good home in the area.
Offer a rent-back agreement – Those who sell their home may need some bonus time to find their next property. Since they may struggle a while after selling, you can win in a bidding war by offering a predetermined amount of time in which the sellers can remain at their previous house while they search for a new one.