As we move into the second half of the year, one thing is
clear: the current real estate market is one for the record books. The exact
mix of conditions we have today creates opportunities for both buyers and
sellers. Here’s a look at four key components that are shaping this
unprecedented market.
A Shortage of Homes for Sale
Earlier this year, the number of homes available for sale
fell to an all-time low. In recent months, however, inventory levels are
starting to trend up. The latest Monthly Housing Market Trends Report from
realtor.com says:
“In June, newly listed homes grew by 5.5% on a
year-over-year basis, and by 10.9% on a month-over-month basis. Typically,
fewer newly listed homes appear on the market in the month of June compared to
May. This year, growth in new listings is continuing later into the summer
season, a welcome sign for a tight housing market.”
This is good news for buyers who crave more options. But
even though we’re experiencing small gains in the number of available homes for
sale, inventory remains a challenge in most states. That’s why it’s still a
sellers’ market, giving homeowners immense leverage when they decide to make a
move.
Buyer Competition and Bidding Wars
Today’s ongoing low supply, coupled with high demand,
creates a market characterized by high buyer competition and bidding wars.
Buyers are going above and beyond to make sure their offer stands out from the
crowd by offering over the asking price, all cash, or waiving some
contingencies. The number of offers on the average house for sale broke records
this year – and that’s great news for sellers.
The latest Confidence Index from the National Association of Realtors (NAR) says the average home for sale receives five offers (see graph below):
For buyers, the best way to put a compelling offer together
is by working with a local real estate professional. That agent can act as your
trusted advisor on what terms are best for you and what’s most appealing to the
seller.
Home Price Appreciation
The competition among buyers is driving prices up. Over the
past year, we’ve seen home price appreciation rise across the country.
According to the most recent Home Price Index (HPI) from CoreLogic, national
home prices increased 15.4% year-over-year in May:
“The May 2021 HPI gain was up from the May 2020 gain of
4.2% and was the highest year-over-year gain since November 2005. Low mortgage
rates and low for-sale inventory drove the increase in home prices.”
Rising home values are a big part of why real estate remains
one of the top sought-after investments for Americans. For potential sellers,
it also means it’s a great time to list your house to maximize the return on
your investment.
A Rise in Home Values and Equity
The equity in a home doesn’t just grow when a homeowner pays
their mortgage – it also grows as the home’s value appreciates. Thanks to the
jump in price appreciation, homeowners across the country are seeing
record-breaking gains in home equity. CoreLogic recently reported:
“…homeowners with mortgages (which account for roughly
62% of all properties) have seen their equity increase by 19.6% year over year,
representing a collective equity gain of over $1.9 trillion, and an average
gain of $33,400 per borrower, since the first quarter of 2020.”
That’s a major perk for households to leverage. Homeowners
can use that equity to accomplish major life goals or move into their dream
homes.
Bottom Line
If you’re thinking about buying or selling, there’s no time
like the present. Let’s connect to talk about how you can take advantage of the
conditions we’re seeing today to meet your homeownership goals.
Source: Real Estate with Keeping Current Matters
