The intense and prolonged sellers market has had a profound impact on Americans buying and selling homes this year. An incredibly low supply of available homes has persisted throughout the U.S. and historically low mortgage rates continue to encourage new potential buyers to enter the market – despite the competition. If homeowners thinking about selling their home, now is absolutely the time to do so.
Listings are still down, despite the market conditions that are incredibly favorable for selling a home.
Comparing year-to-date Bright MLS cumulative listings hitting the market in 2020 and 2021 (covering most of the mid-Atlantic region and the entirety of Houwzer’s Philadelphia, Baltimore and DC region footprint), both years started out on a fairly similar trajectory, but starting in February 2021, listings fell behind.
By early April 2021, though, listings picked up pace and exceeded the year to date listings total of the same period the year before. This is not too surprising given how much real estate activity fell off during the early days of the pandemic.
What is somewhat surprising is that 2021 so far has not seen significant listing gains compared to 2020, especially because the market conditions to sell a home have never been better and this is in comparison to the worst periods of the pandemic shutdowns.
It is somewhat shocking that more homes are barley coming to market vs. what occurred during a (hopefully) once-in-a-lifetime pandemic, despite massive year-over-year increases in buyer demand and the pandemic winding to an end. It’s worth mentioning that this could be due, in part, to the prolonged period at home and the shift to remote work in 2020. Many who planned to move this year might have already done so.
Cumulative New Listings Jan-Apr 2021 vs. Jan-Apr 2020
Market Performance Breakdown
- Philadelphia, PA: Median sale prices are up 16.7% year over year in Philadelphia and inventory is at 1 month (down from 4.8 months same time last year)
- Washington, D.C.: Median sale prices are up 10.1% year over year in DC and inventory is 0.8 months (or ~24 days, down from 1.9 months same time last year)
- Baltimore, MD: Median sale prices are up 10% year over year in Baltimore and inventory is 0.9 months (or ~27 days, down from 3.2 months same time last year)
- Orlando, FL: Median sale prices are up 13.5% year over year in Orlando and inventory is 1 month (down from 4 months same time last year)
- Tampa, FL: Median sale prices are up 18% year over year in Tampa and inventory is 0.8 months (or ~24 days, down from 3.7 months same time last year)
At this point, there is double digit year-over-year median list price appreciation in the Mid Atlantic and Central Florida markets, and inventory is at almost the minimum levels mathematically possible across the board.
Anecdotally, increasingly desperate tactics from would-be buyers are becoming the norm: “love letters” from prospective buyers to owners of homes not on the market persuading them to sell, buyers waiving all contingencies including inspection, and buyers submitting multiple offers concurrently on multiple homes knowing they will most likely miss out on all of them.
In order to have the optimal conditions for a healthy, active, liquid real estate market, both buyer demand and listing inventory must be present:
The good news is that this is not in stagnant market, so listing inventory only needs to tick up in order to get to optimal conditions. The current market situation is kind of a form of a Prisoner’s Dilemma. One of the reasons listing inventory is so low, is that homeowners are stuck in their homes because it’s so difficult to purchase a new one. However, this is a circular problem that requires cooperation to solve. If those “stuck” homeowners all listed their home at the same time then the inventory problem would be solved, and they’d also be able to easily buy in a healthy market with a balanced amount of buyers and sellers.
It is–without a doubt–the best time in history to be a home seller in any of these markets. And if homeowner does decide to sell, and others decide to do the same–it will also help them buy a home by increasing inventory.
The other silver-lining: after briefly ticking up, mortgage rates are trending back down toward historic lows, slightly increasing home buyer purchasing power versus a month ago:
While this is good news for anyone hoping to keep their monthly mortgage payments down, it will do little to cool the white-hot market. If and when mortgage rates finally begin to rise significantly, there will likely be some reduction in demand.
If homeowners are in a position to buy and sell a home, now is an ideal time to do so. Despite the difficulties buyers may encounter, there are two important factors working in their favor: extremely low interest rates, and a strong seller’s market in which to sell the existing home.