The housing market will remain hot this year as favorable interest rates and sky-high demand continue to drive the market forward. Although we are seeing a small rise in rates they are still near all-time lows. The main worry for today’s market is the low inventory of houses on the market. Sure, you can sell your home no problem, but what are you going to move into?
Supply is extremely tight and inventory levels are dramatically below anything we have seen in the past.
New construction is not keeping up with demand, and the pandemic shutdowns took a huge chunk out of builders’ production, as they were not able to put anything on the market for six months. However, thanks to low interest rates, they were selling more than they ever sold before. The market was already struggling with inventory but due to this decrease in builders’ supply inventory got even tighter.
Plus let’s not forget, with low inventory comes higher home prices since more buyers are competing for the same homes which drives up a seller’s price. A recent report showed home prices grew by about 10% in 2020 and show no signs of letting up in 2021. We won’t begin to see price decrease unless there is an is an excess inventory.
The good news for the housing market is we are definitely not over built. Builders are more in demand than ever and are working quickly to build new inventory for the market.
As new inventory comes onto the market and more people decide to sell their homes, buyers looking to buy this spring could be entering into the market at an amazing time. Fitting perfectly into a sweet spot where there is more inventory and fewer buyers, since a handful of buyers will be bowing out to wait to for the market to slow down. But the thing with real estate is you don’t want to wait. You could be missing out on major appreciation gain.
Currently high demand and tight supply are pointing towards 6% appreciation for homes in 2021. For instance, if you buy a home for $600,000 with 10% or $60,000 down, a 6% appreciation on that home equals a 60% return on that down payment investment. You can’t expect an appreciation gain like that if you try to wait for the market to slow down.
If you're shopping for a home, with rates near historic lows and home prices appreciating nationwide, there is an amazing opportunity to build wealth for your family through real estate. Contact me today and let’s discuss your situation.