From Realtor.com
If you’re selling your home right now—or thinking about doing it soon—you should know that today’s housing market is unlike anything we’ve seen or experienced lately, maybe ever.
A few years earlier, home sellers might have waited weeks or months to get an offer that might not be as high as they’d hoped. Buyers may have lowballed or driven a hard bargain asking sellers to make sure of repairs or other concessions before closing the deal.
But the COVID-19 pandemic changed so much of our lives, and real estate is no exception.
During the pandemic’s height, Americans started moving, many freed from the constraints of a daily commute to the office. This fueled a homebuying rush, with properties in many areas of the country getting snapped up fast, sometimes within days of going on the market. Buyers mired in bidding wars were offering more than the asking price, often waiving inspections and other demands to sweeten their position.
In general, this was all good news for home sellers on the market at that time. But now that the pandemic has ebbed, the game has changed again.
This means that it’s more important than ever to understand the state of the housing market and play your cards carefully to fetch the best offer and terms for you. Here’s what sellers need to know about the real estate landscape today.
How the COVID-19 pandemic affected the housing market
“We’ve all been through a hopefully once-in-a-lifetime experience that dramatically changed the way we lived, worked, and went about our daily lives,” says Realtor.com® Chief Economist Danielle Hale. “Even as we move forward and get back to living the way we used to, it’s likely that these experiences will stick with us and shape the way we make decisions for years into the future.”
For one, pandemic lockdowns made many people realize that their current living spaces just aren’t working for them anymore.
“One of the major motivations of homebuyers is the desire to have a larger, more functional home,” says Jason Gelios, a real estate agent with Community Choice Realty in Southeastern Michigan.
This is particularly true for people who started working remotely during the pandemic—who, after cramming their desks into dining rooms, “cloffices,” and other corners, are ready to upgrade to a bigger house so they can work at home with more privacy and comfort.
“This allows permanently remote-working people to be more productive in their home,” explains Gelios.
And since remote workers may no longer need to commute to the office often or at all, many are now house hunting in areas they hadn’t previously considered.
“With remote work flexibility becoming the new normal, buyers sought out areas like South Florida where they could enjoy the outdoors, extra space, and the tax benefits that come with living here,” says Chad Carroll with The Carroll Group at Compass South Florida.
Home prices are high.
The good news for home sellers is that home prices are high. They hit a record high in June, with the median list price hovering at $449,000. Since then, prices have ebbed to a median of $417,000 in November, but this is still much higher than prices were a year earlier.
This has pushed homeowner equity to record-high levels.
“The increase in housing prices makes it a great time for a home seller to cash out on their homes now,” says Beatrice de Jong, consumer trends expert at online real estate transaction company Opendoor.
However, this highly profitable market for sellers comes with a big caveat if selling means you’ll need to buy a new home yourself. Sellers searching for their next home will face those same high prices, plus rising mortgage rates (more on those next).
Interest rates are up.
Mortgage rates have more than doubled over the past year from the 3% to 7%.
This means many more homebuyers struggle to borrow the money necessary to afford a home. As a result, demand has cooled. Many homeowners locked in a low-interest-rate mortgage a year or earlier may decide to stay put rather than sell and then have to buy a new house at a higher rate. Still, some homeowners may be motivated to trade for other reasons.
It’s still a seller’s market.
The pandemic fueled a hot seller’s market, where homes sold at record speed and record-high prices. And while rising interest rates have cooled demand somewhat, sellers still have the advantage.
“There are many ways to define a seller’s market,” says Hale. “But a few key hallmarks are limited availability of homes for sale, fast-selling homes, and rising home prices.”
Although mortgage rates are taking a bite out of buyer demand, most buyers are looking for a new home because it’s the right time for them—not because of market conditions.
“They’re getting married, moving in with a partner, expanding their family, or planning to do so,” Hale explains.
And the same wisdom applies to deciding whether to sell your house: Even though market conditions are in your favor, you should ensure it’s the right time to sell your home for you. Weigh your circumstances, including any current or upcoming life changes such as a new job, retirement, the arrival or departure of family members within the home, and more.