Historically low interest rates, insufficient housing inventory and a large wave of homebuyers seeking a lifestyle change have combined to create a robust sellers’ market in which bidding wars are becoming the norm, reports Weichert, Realtors®. The company recorded strong performance in June and July, rebounding after the height of the pandemic.
In a sellers’ market, the demand for homes far exceeds the inventory available for sale.
Low inventory was already a concern before COVID-19. Now that more buyers have entered the market, the lack of homes for sale has become even more challenging. Total housing inventory at the end of June was down 18.2 percent from one year ago, according to the most recent report from the National Association of REALTORS® (NAR).
After months of stay-at-order orders due to COVID-19, many people—especially urban dwellers—are ready for a change. They are searching for larger homes in less-densely populated areas that include more lifestyle amenities. These home seekers are ready and willing to buy, making now an opportune time for homeowners to hang a “For Sale” sign.
Some homeowners who have been considering selling their home may be unaware of this buyer demand. With low supply, sellers who list now are selling their homes fast.
“In any local market where the home is priced at the median sale price, those homes are selling quickly—especially in the first-time homebuyer segment and the trade-up buyer market,” explained Carlo Siracusa, president of Residential Brokerage for Weichert, Realtors®.
Advantages of Selling Now
“If you can sell your home now, you should,” said Siracusa. “When supply is low, you are going to get more money than you would in a more balanced marketplace. Nearly 20 percent (17.5 percent) of the homes Weichert listed in June and July sold above list.”
Chris Antony, Weichert’s regional vice president for Maryland, Virginia and Washington D.C., warned that fewer choices often result in faster time to closing, multiple offers and bidding wars, which also drive the sale price up. “In Weichert’s Vienna, Va., office, an associate with seven listings during the pandemic had all seven homes go under contract within three to four days of listing.”
Sellers are indeed reaping the benefits. The median existing-home price for all housing types in July was $304,100, up 8.5 percent from July 2019 ($280,400), according to NAR.
What’s Driving Buyer Demand?
Accelerating the decision-making process for both buyers and sellers are historically low interest rates, which have been hovering around 3 percent for a 30-year, fixed-rate mortgage, depending upon the borrower’s credit score, down payment and other factors.
“There’s never been a better time to be a seller,” said Eric Declercq, president of Weichert Financial Services Corp. “Sellers definitely have more equity in their homes. They are selling for the highest price right now. And if that seller is a move-up buyer, they are able to purchase their new home with the lowest interest rate of their lifetime.”
Declercq explained that when interest rates are low, they attract additional buyers in a couple of ways. First, those who were sitting on the fence are now more inclined to buy. Second, buyers who previously qualified for less now qualify for more—they get more house for their money.
“It’s opening up a larger pool of buyers, so a seller might have more interest in their home and even experience bidding wars, which we see happening now,” he said. “Low interest rates benefit sellers in the same way they benefit buyers. Once they sell, they can purchase a new home at the same low interest rate and may qualify for more house.”
How Sellers Can Score Top Dollar Quickly
Just because buyers are snapping up limited homes quickly, however, doesn’t mean a seller shouldn’t spend some time preparing their home for sale. Ironically, during COVID quarantine, many people took advantage of the time to tackle neglected home projects and to organize and remove clutter, giving them a jumpstart on the home-selling process.
“As real estate professionals, we always advise sellers to declutter and de-personalize their home,” Weichert’s Siracusa said. “People want to be able to visualize their belongings in the space.”
In the current market, Siracusa sees buyers being more forgiving about surface imperfections.
“You don’t necessarily have to paint the walls—just get out your Mr. Clean Magic Sponge and clean them. These buyers are not going to ask for a contingency for painting; they’re willing to call a contractor.”
Weichert’s Anthony added staging is important. “Purchasing a home is an emotional decision. Especially during COVID, this is not just where the buyer is going to live but where they may be working for the next year.”
For more information, please visit www.weichert.com.