Here’s a look at the latest news in the real estate market.
- 2021 is shaping up to be a real seller’s market
- Flexibility and creativity are key to buying on budget
Real estate industry trends
If 2020 was the Year Of The Home, 2021 is shaping up to be its sequel. Low interest rates and remote working opportunities have many city dwellers looking to buy into the country or suburban life. As a result, we’ve seen housing inventory shrink, prices soar, and markets become more competitive.
In a recent WaPo article, NAR chief economist, Lawrence Yun predicted new-home sales will jump 21 percent and existing-home sales will shoot up 9 percent in 2021. Lawrence isn’t the only one predicting a feeding frenzy. Redfin’s 2021 Housing Market Predictions echo his sentiment, predicting a 10% increase in home sales including a building boom.
This increased demand is paired with dwindling supply. Realtor.com's latest Monthly Housing Trends Report noted the number of homes for sale reached an all time low in December, dipping below 700,000. That was paired with an average time on the market of just 66 days—two weeks fewer than the year prior.
- Number of homes for sale declined 39.6% compared to 2020.
- Median listing price increased 13.4% over last year to $340,000.
- On average, homes sold in 66 days—nearly two weeks faster than last year.
This shift in supply and demand may make homebuying a little trickier in 2021, but not impossible. We have some savvy workarounds for both agents and homebuyers to help navigate this housing hullabaloo.
How to stay engaged in today's competitive market
The waters are still chummed with low interest rates. As of the week ending January 29, Better Mortgage Market Rate* hovers around 2.672%, compared to the 2.730% Freddie Mac Primary Mortgage Market Survey (PMMS) Rate**. And that’s good news if you’re looking to buy (or help homebuyers find homes), but don’t be surprised to find stiff competition for homes in the market.
Homebuyers and agents will have to be a bit more creative in their searches and decisive when it comes to making offers and counter offers. Here’s our advice for both homebuyers and agents while navigating this new landscape:
Tips for homebuyers
- Get pre-qualified to make competitive offers.
Know your market: Research listings, pricing, recent sales, and days on market thru Zillow.
- Consider different neighborhoods: Let your agent know you are open to casting a wider net.
- Determine your absolute bottom line: When involved in a bidding war emotions can run high. Be cautious about submitting offers above asking price to avoid draining your savings. Lenders won’t lend more than a home’s appraised value.
Tips for real estate agents
- Consider homes slightly out of your client’s price range when searching the MLS: Look for homes with more than 45 days on market for potential price cuts.
- Create a client profile update every 30 days: During these challenging times, personal and economic situations change rapidly.
- Suggest new areas to your clients: Often buyers are laser-focused on one town or neighborhood. Send appropriate listings that meet their criteria in a neighborhood they may not know about.
- Stay up-to-date on COVID learning policies in different school districts: School district guidelines change weekly. Buyers relocating require the latest information on both public and private school COVID policies.
Our Better Real Estate Partner Agents found success in flexibility and already reported back with learnings from all around the US:
Mary J Auer (Northern, NJ)
What I am hearing from clients that have put a hold on their search is that they do not like the climate of the sellers' market. COVID has made that even more fierce and some prefer to wait it out. To keep my clients engaged through the "waiting game" I continue to do a manual search weekly in their areas of interest. Most are on the auto-alerts but may not be looking at those as readily as my specific searches.
Patrick J Valente (Northern, NJ)
My idea of keeping buyers engaged would be to connect with them weekly and add them to the local "MLS Prospect Match" for daily newly listed properties in the client's selected areas. Call the customer and discuss the potential properties. Hopefully, the customer will be excited to preview the houses and ultimately make a purchase.
Leslie Czapka, (Northern, NJ)
To keep some people engaged I am reminding them that at some point their offer will be considered so pivoting to homes that have longer days on market are potentially “easier” for them to get to the closing table. Additionally, any home that may be slightly out of my clients’ price range that has more than 45 days on market could be subject to a price improvement; so I remind them that factor is potentially in play.
Belia Martinez (Greater Bay - San Francisco, CA)
I stay in touch with my buyers and put them on a drip email so they can see which homes are coming on the market. I call and text them every couple of weeks to check in and see how they’re doing. I also share any “coming soon” homes that may be of interest to keep them active.
Robert Kinoshita (Greater Bay - San Francisco, CA)
San Francisco has seen a downward trend in condo values as inventory has increased over the months. Ample inventory and low-interest rates have compelled many buyers to act now. I advise my clients that it’s the perfect storm for buying a condo in San Francisco, inventory is way up and interest rates are way down.
Greg Corvi (Greater Bay - San Francisco, CA)
I have had a couple of clients pause or delay their search once they see what is in their price range. The reality of this very "seller-friendly" current market can frustrate a buyer. They’re already fully aware of the low-interest rates, which most likely was a primary reason for sparking their home search in the first place. I remind them that locking in a good mortgage payment with low-interest rates is important as well.
Jenny Keepers (Portland, OR)
When the buyers go on-hold status, I continue sending them houses in their price range that fit their criteria, and updates as to what the market is doing. I also keep them updated on the interest rates, and ping them if they take a dip. I remind them that when the interest rate goes down, it increases their buying power. Then I calculate how much more they would qualify for in sales price and with the same monthly payment and show them what the reduction in the rate translates to.
Becky Brunk (Seattle, WA)
For the most part, my clients are waiting to buy because of extremely scarce inventory and rising prices in the Bellingham area. Until that changes, I'm taking this opportunity to educate them about the wonderful communities that surround us and offer home options that are both highly desirable and likely to remain more affordable. Expanding horizons helps people move forward in our competitive market!
Christian Lalario (Seattle, WA)
The most common reason a buyer decides to put their search on hold is "the market is too competitive and I don't want to get involved in bidding wars." I usually counter by reminding them they’re very fortunate to be buying at a time of historically low-interest rates. Yes, the market is competitive and challenging but there will be opportunities. As long as we are persistent and diligent, I will eventually secure a property for you.
Julie Smith (Denver, CO)
I touch base with my buyers every couple of weeks and keep their searches going in the MLS. Whenever I see a home that checks all their boxes I reach out with a text or call to see if they’d like to tour it. It keeps their interest going and hopes alive. Right now, I have noticed the main thing is not to press or push but to try to keep them moving forward.
David Timm (Denver, CO)
One of my prospective Better buyers has prequalified for $100k. Unfortunately, in our local market the median price is about 4x that. I continue to inform them of the market with updates & snapshots of pricing and the trends to see if anything may change for the buyer in the future. It would be helpful if the client was given a clearer understanding of general market conditions during the pre-qualifying process to properly set their expectations.
Denise Lancelotta (The Lancelotta Group) (Baltimore, MD)
I stay in constant contact with all my clients. When I get someone that is responsive and truly wants to buy a house, I send them listings and try to meet up with them as much as possible to build that bond. Right now it’s a tough market so I have been counseling all my buyers a lot! They are discouraged but it’s my job to keep them engaged in submitting offers and staying positive. My clients react like I do. Got to stay positive. The rates are so low right now and buyers can pay less in a mortgage payment than renting. It’s a great time to buy. I am turning renters into buyers for this reason.
Hope Cullen (Baltimore, MD)
I check the client's portals often and see if they are using them. I reference properties from the portals and send them emails asking what they think about these particular properties. I also call and update them with the current mortgage rates.
What Real Estate Agents can do Next
- The New Year is a great time to touch base with a “how are you doing” call to buyers
- Create a “Moving Into 2021” Market Newsletter or E-blast
- Start a bi-weekly blog to stay in front of buyers and maintain focus
*Better Mortgage Market Rates were calculated from an average of rates using the assumptions below to provide a representative offered interest rate for each month. Assumptions include: $200K, $300K, $400K, $500K loan amount; 30-Year Fixed purchase, 30-Year Fixed rate and term refinance; borrower with above average credit (i.e., FICO score of 760 or higher); loan-to-value ratio of 80%; subject property is a Single Family Residence; subject property is borrower’s primary residence; subject property is located in one of our six highest volume metropolitan statistical areas.
**Freddie Mac PMMS Rates are the result of surveys to lenders on the rates and points for their most popular 30-year fixed-rate conventional mortgage products, and an origination-weighted average of lender responses. The survey is based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. This average is widely regarded as the industry standard tracker of mortgage rates week over week.