It’s time for the February Market Update.
We are a year into this COVID pandemic. Hard to believe, isn’t it? But the housing market continues to break records. So, How’s the market in Delaware this month?
Sometimes I feel like a broken record myself.
Has the housing market slowed this winter? Not the way it usually does. If you go back and watch our Market Updates since November, you’ll see that the same trends continue.
Most notable, both nationally and here in Delaware –
- Prices continue to increase
- Mortgage rates remain low
- Demand is strong
- Housing inventory is low
Here’s a quote from NAR that summarizes 2020 with the final numbers:
Existing home sales, the total was $5.64 million in 2020, up 5.6% from 2019 and the most since before the great recession.
We sold more homes last year than we did in 2019. And, we’re projected to sell even more in the coming year. Here are the transaction forecasts from Fannie, NAR and from MBA, each having more sales this year than we had last year during the pandemic.
Experts also predict that prices will continue to appreciate. From NAR down to CoreLogic, the average of these seven forecasts is about 5%. Remember, historically, in this country, home price appreciation has been about 3.8%/year.
I hope the experts are right when they say there’s going to be more supply coming into the market as there will undoubtedly be more demand.
Will interest rates remain flat?
We’re starting to see upward revisions. But the reality is that we’re going to be in a good rate environment in 2021. Certainly, in the low threes, whether that’s 3.2%, 3.5% or whatever forecasters say throughout the year.
Let’s talk about Inventory
All the experts tell us that more people would sell in 2021.
First of all, Ali Wolf here, Chief Economist at Zonda, a trusted source for information. She says this:
“Some people will feel comfortable listing their home in the first half of 2021.”
“Others,” she says, “will want to wait until the vaccines are widely distributed.”
This suggests more inventory will be for sale in late 2021 and into the spring selling season of 2022.
I certainly hope so because we do not see it yet in Delaware, and I think that is because a significant percentage of the 78M Baby Boomer population sees Delaware as where they want to be. We have more buyers than sellers of the type of home and location that they want.
We need more listings.
It could be the one thing that holds back the market and probably has held back the market. Buyers, and their agents, can’t find them a home to buy. Some potential sellers don’t put their homes on the market because they don’t know where they can go.
Going back to 1982, we’re at the lowest point since we’ve tracked active inventory—about 320,000 fewer homes on the market today than there were at this time a year ago.
I talked with Mike Malone this morning, one of our buyer agents. He spends most of his time in between appointments combing the MLS for homes and driving around to preview them, trying to find that needle in the haystack for his clients.
Working from home
According to NAR’s real estate forecast summit, in 2019, about 6% of the population worked from home. In 2020 that shot up to 21%. By 2021 we’re estimating about 18% of people working from home. And in 2022, that number should settle back into about 12%.
This trend toward working from home creates more demand in Delaware, but not necessarily more listings, at least in Southern Delaware. Younger Boomers are relocating here. Why wait until retirement if I can work most of the time remotely?
I think about those fortunate young retirees that did not downsize when they bought 5 or 6 years ago; they were sure that the children and grandchildren would visit often.
Now is the perfect time to sell and downsize.
The other area that’s going to bring more inventory into the market is building. Again, I read what all the experts are saying, and I see the builders in Delaware doing their very best. However, even our builders are having trouble keeping up with demand. See this blog post on Buying New Construction in 2021.
I always ask our sellers if they considered a resale when they bought. Many admit that no, they did not.
Now is the best time, maybe the one time, that your existing home can easily compete with new construction due to demand. If you have a “newer” home that satisfies today’s buyer taste, it’s a great time to consider selling.
Contact Active Adults Realty so our experts can guide you through the market changes.