Talk about a strange summer. Between the continued threat of the novel coronavirus, a wobbly economy, and layoffs happening left and right, it's no surprise that many who may have hoped to sell their home this season are wondering whether to put those plans on hold—or they've already thrown in the towel.
Such hesitancy is understandable. Yet the irony is that, after closely examining the current housing market conditions, many real estate experts believe this summer could be one of the best times to sell a home in years.
"Given the pandemic and uncertainty it's caused, the general sentiment [among some owners] is that now is not a good time to sell your home," says Danielle Hale, chief economist at realtor.com®. "Yet so far, the data suggest the opposite—that buyers outnumber sellers in the housing market, which means it's better to be a seller than a buyer.”
So if you're a home seller who assumed they should write off this summer's home-selling season as a lost cause, it's time for a reality check! Here are a few reasons why the market could actually be moving strongly in your favor.
1. Home buyer demand is back with a vengeance
Granted, in the spring, when COVID-19 was spurring many states to enforce quarantine and ban open houses, home selling understandably went dormant for a while. But now that lockdown restrictions are loosening up in some states, home buyers are out with a vengeance—and many of them are eager to make up for lost time.
Indeed, the real estate market is already seeing strong signs of a rebound, according to the National Association of Realtors®' Pending Home Sales Index (a forward-looking indicator of home sales based on contract signings). In May, after two months of decline, pending home sales shot up 44.3%—the highest month-over-month jump since 2001, when the index began.
“There's very significant demand,” says Matthew Gardner, chief economist at Windermere Real Estate. He adds that demand is strongest right now in the suburbs and in smaller, cheaper cities—as buyers look to escape the biggest metros and more companies follow tech titans like Google, Amazon, and Microsoft in allowing employees to work remotely for the foreseeable future.
“If we continue to see an increase in working from home, people can move farther away, where they can get more bang for their buck,” Gardner says.
2. Home inventory remains low
Yet amid this glut of home buyers, the number of homes for sale to actually meet this pent-up demand is at an all-time low.
"There was insufficient supply last year," says Lawrence Yun, chief economist of the NAR. "This year during the pandemic, the shortage has intensified."
According to realtor.com's market outlook, housing inventory in June was 27% lower than a year earlier.
And some reasons for the shortage of available homes have little to do with the recent coronavirus crisis. The number of homes for sale is at a “generational low,” says Gardner, because people are living in their homes longer than they used to. In fact, NAR data shows that Americans are spending an average of 13 years in their homes before moving.
The lower inventory is also the result of fewer distressed properties on the market, “due to the massive government stimulus support, including mortgage forbearance and generous unemployment benefits,” Yun explains.
3. Home prices are up
With demand for homes up and inventory down, the conditions are perfect for home sellers to get high prices.
"Many sellers can get top dollar in the current market conditions," says Yun.
According to NAR , single-family home prices increased in most markets during the first quarter of 2020, with the national median single-family home price increasing 7.7%, to $274,600.
This good news may come as a surprise to sellers, since it was expected that the housing market would take a hit and home prices would drop because of the pandemic. That's quite the contrary.
“Home asking price growth is actually higher now than it was before the pandemic,” Hale explains.
4. Mortgage interest rates are low, too
Another factor pushing home buyers to shop are the historically low mortgage interest rates.
According to Freddie Mac’s July 2 report, average interest rates recently reached a new record low of 3.07% for a 30-year fixed-rate mortgage. Given this means homes could cost potentially tens of thousands less over the lifetime of the loan, it's understandable that mortgage purchase applications have jumped since last year.
5. The economy is showing slow signs of recovery
While the pandemic led to record high unemployment rates in March, these levels have recently fallen slightly, which could be a good sign that people are still eager and able to buy a home.
Continuing spikes in COVID-19 infection rates may have a negative impact on employment numbers in some areas going forward, but for now the national trends are heading in the right direction.
"The pandemic sharply curtailed economic production and consumer spending in March, April, and part of May. As a result, joblessness soared," Hale explains. "But data from May and June suggests that businesses are adding back jobs as consumers get back to spending, and some companies are now scrambling to keep up demand. Some speculated that we'd see a sharp bounce back in activity, and I think it's fair to say that's what we're seeing so far."
6. Home buyers' needs have changed
Along with working remotely, people have been spending more time at home in general—and this, in turn, has sparked a fresh deluge of home buyers whose current homes no longer seem as comfortable or roomy as they were pre-COVID-19. That is, if your dining table now doubles as your "office," you might be tempted to trade in your short commute for another room or two so all can work from home in peace.
“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.
“Spending three months locked up at home taught a lot of
people that where they live is important,” agrees Jed Kliman, managing broker at Windermere Real Estate in Seattle. “Clients I’ve been working with recently are trading up because they've spent more time in their homes and realized it didn't meet their needs.”
Home offices, more privacy, outdoor spaces, and just more room are becoming more important to homeowners. Kliman says playing up these features and amenities when you sell your home can attract buyers. Home staging and visually appealing listing photos, though always important, are especially crucial in today’s market.
“Staging, professional photos, even video and 3D virtual tours—those are all really important because people start their home search online, and they have to be moved and captivated to go see a house,” Kliman says.
In addition to understanding market conditions, home sellers will want to know that the process from offer to closing may work a little differently today.
For example, social distancing may mean home inspections and repairs take a little longer. Kliman says some of his sellers have been doing their own pre-inspections and making reports available to interested buyers to speed up the process.
The bottom line: “You want to make it as easy as possible for a buyer to make an offer,” he says.
Just be prepared for the unexpected, Hale says.
“The time it takes to sell a home does seem to be shrinking, as states lift restrictions on business and consumers feel more confident and comfortable," she says. "But depending on how infection rates evolve, this could change. This doesn't mean we're out of the woods completely."