The 2021 Real Estate Market from a few perspectives..
Bottom line, the market is good and nothing like the 2000’s. I thought sharing these two perspectives would help with some of the questions we as agents are asked daily. Those of us that lived through the market adjustment in 2006-2007 understand the times are different. It feels different and nothing like it is today. The market is strong, banks are robust, and inventory depleted with very little in most markets to show and sell. I have always told my clients that when the market dropped in 2007, so did the builders. The builders that lasted stayed within their pocket of lot inventory they built for anyone that was ready. The builders that did well and saved during the boom were ok and others got into the renovation business. The select few got out of the business and this rang true for Realtors as well. Our lack of construction and new builds has put us in this position. We built very little during 2008-2014 and now we are seeing the after effects. This market is has forced us as agents to really coach our buyers and sellers to get the edge. The buyers are having to compete on every house and often giving up the key terms like inspection and appraisals. This varies per market area, but the rural and slower markets have seen a well needed cleansing of inventory. Below are some comments from Forbes and Bloomberg on the market. Understand that all markets are not created equal and what happens in Seattle doesn’t mean the same in Richmond, Virginia. Comments by John Martin with Shaheen, Ruth, Martin & Fonville Real Estate based out of Richmond, Virginia.
“In early July 2021, Fannie Mae confirmed something that most real estate professionals already knew: Buyers and sellers are currently on a very different page. Over half of buyers (64%) think it is now a bad time to buy. By contrast, an even higher percentage of sellers (77%) think it is a great time to sell. But are the nation’s sellers and buyers right — is it really a bad time to buy and a great time to sell? And if they are right, what is likely to happen to the real estate market in the final quarter of 2021, said Kevin?
Bad Time To Buy, Good Time To Sell? It’s Not So Simple
On the buyer side, there are many reasons to be wary about buying at this time. In addition to the cost (some economists have suggested that home prices are currently inflated by 15% to 20%), inventory is low and competition is fierce. Still, these factors shouldn’t necessarily hold buyers back. It may still be a great time to enter the market for anyone who was already planning to buy and financially ready to do so.
On the seller side, there is no question that the past year has offered many opportunities. Given the shortage of inventory in most regions of the country and the high demand for homes, many rural and suburban homeowners continue to realize phenomenal returns on their properties. In some small towns, prices have soared up to 25%.
Three key factors are fueling the current low inventory and high demand for homes, especially in rural and suburban areas. First, even before the pandemic, many millennial families were already leaving cramped quarters in urban areas for suburban and rural locales. Secondly, remote work, which seems here to stay, is expanding where people can live. Finally, buyers who may have once preferred to invest in a new home are increasingly looking at resale options as supply-chain problems continue to hamper the ability of developers to complete projects. This Decade Given the potential to turn a huge profit on one’s home, owners certainly have many reasons to sell at this time, but there’s a catch. Unless you’re moving to a market that isn’t currently suffering from shortages or you’re planning to downsize (e.g., to sell a large suburban home to move into an urban condo), finding a new home may prove difficult and costly. So, is it a good time to sell? Yes, but likely only if you’re committed to radically changing your own living situation. Selling your current home with the hopes of landing a great deal on a similar or larger home in the same community may backfire.” states Kevin Markarian
According to Corcoran, “I’ve never seen an increase like” the pandemic-related surge in U.S. home prices, Corcoran said in the interview.
For example, U.S. home prices surged 19.7% in July, once again posting the biggest jump in more than 30 years, according to a Sept. 28 tally of the S&P CoreLogic Case-Shiller index of property values. This followed an 18.7% jump in June, and was the 14th straight month of accelerating price increases.
“The market has been going absolutely bonkers with no end in sight,” Corcoran said. “Everything is being sold in bidding wars. I’m just hoping that the prices cool down a bit because so many people are left out of the market.”
She doesn’t see ballooning home prices causing the same sort of financial chaos kicked off by a mortgage crisis more than a decade ago.
“It is not the same kind of market. Today’s market is fueled by individual buyers who want a better place to live,” Corcoran said. “When we had that dropoff, it was fueled by investors, house flippers, poor mortgages. It was a false market, with a false bottom, and it fell. We’re not going to have that now.” By John McCorry and Tom Keene –
Predictions For The Final Quarter
Kevin “With so many sellers under the impression that this is a great time to sell, it seems likely that more sellers will come out of the woodwork over the coming months. After all, why not see how much you can get for your home in today’s hot market, even if you weren’t planning to sell? If more sellers do come forward, this should result in an overdue market correction, eventually bringing home prices closer in line with current home values.
But what if the buyers don’t return? There is a small chance that even as inventory increases, buyers will remain wary. In this case, we could see an overcorrection of the market. However, given the current demand for homes and the ongoing supply-chain challenges facing developers, an overcorrection seems unlikely.
All things considered, my prediction for the final few months of 2021 is that that market will remain hot but adjust to become slightly more buyer-friendly, creating great opportunities for sellers and buyers alike as we look ahead to 2022.” Kevin Markarian Forbes Councils Member