Overall, 2020 proved to be a strong year for sales of existing homes. While there was an unsurprising slump in the Spring, by Summer, sales rebounded, surging to their highest level in 14 years (WSJ). A common observation by analysts and real estate agents is that record-low interest rates, combined with work-from-home (WFH) driving new preferences, propelled the market.
Even as late as this past December, a month traditionally almost dead when it comes to home sales, rose 0.7% from November. 22% higher than the year prior. Truly an incredible feat, even in a ‘normal’ year.
One common reality throughout 2020, and not expected to change in 2021, is that it’s a Sellers’ market. The supply simply does not meet the demand. In the WSJ article, above, there is a 1.9 month supply. When a 3-4 month supply is considered snug, 1.9 months is incredibly tight.
Looking at Dave Ramsey’s Real Estate Trends, the #1 trend into ’21 will be slim picking for home buyers. Of those that went to market in November, 2020, 7 in 10 sold homes were on the market for less than a month. If you’re looking to buy, you’re going to be nimble, preapproved, and willing to sacrifice on your desires somewhat.
If you’re renting, or a first-time home buyer, there’s another challenge, just as big as availability. If you’re renting, the continuing growth in existing-home prices (15% in ’20) may surpass your ability to save a large enough down payment.
For Sellers, the current market has its own challenges. As the seller, the continued housing shortage will mean prices keep growing, and competition is low. List it, it’ll almost certainly sell. In a hot market, like Austin, Texas, it might be same day. You’re in the driver’s seat.
You probably don’t need articles like Ramsey’s or the WSJ, to highlight another serious concern. Once you sell, you are no longer in the driver’s seat. You’re part of the under-served demand side of the equation. Twice this past year, I encountered sellers that had sold their home and were caught off-guard by how quickly it happened. As a result they were scrambling to find apartments to rent since they’d not yet identified their destination. Plan ahead, before you list.
both median and average home prices
From 2018-20, both median and average home prices grew substantially. There is no reason to expect this will not continue into ’21 given the still-tight housing market.
|Single Family Price (average)|
If you’re considering selling, 2021 looks to be a gang-buster year. If you’re looking to buy, tighten the stirrups, the path will likely be challenging.