Home prices are rising, but is now a good time to sell? That’s a question that many clients and friends have been asking me. The real estate market is making up for lost time, but things might change soon.
Here are three things you need to know about what’s been going on recently:
1. A surge in sales and record prices. This spring, home sales slowed to a crawl due to the coronavirus pandemic. However, this summer, the market has come roaring back. Sales of existing homes surged 24.7% in July compared to June (the last months for which we have full data). That’s the biggest gain in sales since the National Association of Realtors started tracking these numbers in 1968.
Home prices are also rising. The median home price reached a record high this July, both in absolute terms and also when adjusted for inflation. When adjusted for inflation, current median home prices are 3.4% higher than the previous record set during the housing bubble in 2006.
2. Never-before-seen mortgage rates. One thing that’s contributing to both sales and price growth are record-low mortgage rates. The average 30-year mortgage rate dropped to 2.88% a few weeks ago. That’s a number that would have been unimaginable just a year ago, but these days, rates as low as 1.99% have been spotted in the wild. This is making homes more affordable to buyers, and it’s increasing demand even more than the lockdown may have. However, things might be changing.
“Dark clouds could change things quickly, but the skies are clear for now.”
3. Clouds on the horizon. This August, nearly a third of renters were unable to pay rent. Likewise, a growing number of homeowners are falling behind on mortgage payments. These are lingering effects of the economic lockdown surfacing now because unemployment benefits and various mortgage forbearance programs are coming to an end. That’s why experts predict a rise in defaults and evictions, which is likely to wash over the entire market in the coming weeks and months.
What does this mean for you? Well, if you have been thinking of selling, now might be a golden moment. A severe lack of homes for sale means you could sell in record time, and since low mortgage rates are making homes more affordable, you could get top dollar for your home. However, the dark clouds I mentioned above could change things quickly.
We could see an influx of new homes for sale on the market, which would drive down prices and put us into a buyer’s market, with many homes sitting for months while buyers pick and choose among them. That’s why it makes sense to act now if you’ve been thinking of selling.
So if you have questions, comments, or concerns, give me a call and I will answer them so you can make the best choice for your circumstances. I look forward to hearing from you soon.
