This year, 2020, has offered us so many different challenges, but the housing market has stayed hot. How could that be? Record layoffs, unprecedented unemployment, stock market volatility and so on. The housing market has been hot: a low inventory of for sale homes, many people in the market to buy motivated by low interest rates and ability to move where they want to live while working remotely. If you could live anywhere and work from home, you might choose to live in an area with outdoor attractions, closer to your family, or perhaps where you grew up. A lot of what was for years, attractive about living in big cities, has changed because of Covid. The theater, restaurants, museums, and public transportation, all have a vastly different look and use today. With many of the benefits changed, big city living has lost its luster to many. We are finding that we are increasingly working with people from out of town on homes for sale in the area and in many cases, people coming from out of state. This increased pressure has resulted in a shortage in the for-sale inventory. These factors together have resulted in increased home pricing and increased competition.
More Buyers/ Low Interest Rates+ Fewer Homes For Sale= Higher Prices/ Increased Buying Competition
So why is there an inventory shortage? Covid has played a role in people’s thinking about life transition points. Life transitions are categories of movement in the home ownership life cycles. A buyer’s first home, sizing up (family growth), luxury move (home with a pool, more land, lake access…),downsizing (when the family has grown up) and moving to a condominium or assisted living in later life, are transition points in the life cycle of a homeowner. There may be more than these general points in some people’s lives that may be more difficult to generalize.
What can be understood from these points in the life cycle is that they represent points that contribute to the home sale inventory at any given point. If there are external factors that impact people at these given points, the market is impacted. What we are seeing right now is that many people are choosing not to transition. They are refinancing, updating, or waiting to make their next move in more certain times. While interest rates are low and home prices are high, you have to compete for any home you may see as your next choice and you will be unlikely to buy it with a home sale contingency attached to your offer. Without the next place to go secured, you cannot sell the home your family lives in. These are difficult circumstances in which to make important decisions and so many are waiting even though they might get more for their home.
If you are at one of these transition points in your home ownership cycle and feel the need to do the research, please reach out to us so we can guide you as you weigh the market factors that impact your decisions.