Feeling a little drained after the past few months? Understandable considering all of the chaos that has ensued in the wake of COVID. Some sellers saw the uncertainty in what this chaos held for the future housing market and decided to wait for a safer economic climate before listing their home. The irony is most of those sellers are kicking themselves in the foot as the market has been more competitive than ever (at least in Seattle).
The general sentiment, even from expert economists, was that we would see a major slowdown in almost all activity across the board, and that this might give way to normal circulation throughout the second half of the year. But in real estate, that drop wasn’t quite as significant as predicted – and a result, right now it’s better to be a seller than a buyer, Why?
- Home buyer demand
Yes, the initial lockdowns did momentarily halt transactions as people transitioned into quarantine and agents adapted to the new process of real estate. However, this only made people more eager to return to the market as restrictions lifted – hoping to make up for lost time. This is especially true in tech heavy cities where the buyer pool was basically unaffected. As Matthew Gardner, chief economist at Windermere Real Estate, says, “there’s very significant demand”, adding that suburbs and cheaper homes are also seeing a spike in sales as new buyers take advantage of the low interest rates and others look to escape inner-city living.
- Home Inventory Numbers
Despite the buyer frenzy amidst the real estate market, there is an all-time low shortage of inventory numbers.
According to NAR chief economist, Lawrence Yun, “there was insufficient supply last year [and] this year during the pandemic, the shortage has intensified.” But that more recent drop in inventory wasn’t the biggest surprise. For one, sellers are less likely to open their doors to the public during a health crisis, and two, new construction projects were on hold due to operational restrictions. But on top of all this, Matthew Gardner also says as a generation, people are just living in their homes longer than normal (up to 13 years), which results in less homes for sale.
- Stable Home Prices
Homes prices are determined by supply and demand. So, with demand at all-time highs and inventory at all-time lows, sellers are almost guaranteed top dollar for their homes.
In a recent NAR article, single-family homes have reported an increase in price in almost every market during the first quarter of 2020, with the national median price increasing 7.7%. Let’s just say sellers have been pleasantly surprised considering people were expecting the exact opposite to happen. In fact, the year over year growth rate is actually higher now than before the pandemic.
- Mortgage Interest Rates
This probably isn’t a surprise to anyone, but historically low mortgage interest rates are a great way to get more buyers onto the market. With mortgages typically following a 30-year timeline, buyers save a pretty penny as thousands of dollars are no longer accruing interest. For any type of buyer, owning a home just became a lot more attractive of an investment!
- Builders are hungry
This benefit is more dependent on the location of your home, however, if you are living in the right area, you may want to consider working with a builder or developer. What they offer that standard real estate agents don’t is a streamlined commission free process. That means you still get market value for your home but also have the potential of saving thousands of dollars in repairs, cleaning, photography, staging and any other upkeep required to list your home – let alone the 6% commission that goes to the buying and selling agent.
Plus, nowadays builders are usually environmentally conscious and build quality and healthy product that communities can be proud of. If you’re in cities like Seattle, selling your home to a developer also directly contributes to affordable housing. So, there are long-lasting positive impacts for you and those around you.
- The economy’s road to recovery
To everyone’s dismay unemployment rates reached all-time highs in March, but recently, these rates have begun to decrease, which some hope is a sign that more buyers will continue to flood the market.
Moving forward, increased infection rates may once again cause unemployment numbers to rise – but for now, this is a state by state/city by city situation, and we’re hopeful national trends continue in the right direction.
- Standard of Living
“People are looking at their existing home and saying, ‘If I have to work from home, then maybe my house just doesn’t work,’” Gardner says.
In other words, working remotely has allowed (or forced) people spend more time at home – this, in turn, has created a brand-new fleet of buyers whose current homes just aren’t up to COVID standards. After doubling your dining table as a “work-desk” for three months, your short commute to the office suddenly seems expendable in exchange for some extra square feet. “Home offices, more privacy, outdoor spaces, and just more room are becoming more important to homeowners” says Jed Kliman (managing broker at Windermere Real Estate in Seattle).
This doesn’t seem to be something that will change in the near future, and more and more people are coming to the same realization every day – ‘my house just isn’t cutting it’.
But despite the influx in buyers, sellers shouldn’t be complacent. You’ll still want to make the transaction as easy and painless for buyers as possible. Due to social distancing, some of the closing processes have changed in order to keep everyone as healthy and safe as possible. As a result, some things take longer than usual to finish, but there are things you can do as a seller to expedite the process (for example: doing your own pre-inspection so that information is ready to go for any interested parties).
This, in addition to states reopening, will hopefully speed up transactions and make for more seamless sales, but depending on how this also effects infection rates, we could see this change quickly. For now, it seems like a great time to sell in Seattle.