The Seller’s Market Continues, with One Silver Lining for Buyers
2021 has been a seller’s market for sure, with the unusually low supply of homes coming on the market affecting pretty much the entire country. Even with that, local home sales in the Houston area this year still managed to outpace 2020’s sales by nearly 20%. In addition, the average sales price increased by 15% and the median sales price rose 14%. Houston-area single family home inventory was hovering at a 1.8 month’s supply, compared to the national supply of 2.6 month’s supply.
Homes were on the market much less time, too. In Houston, 26 days was the average time, decreasing from about 56 days last year. Unfortunately for some buyers who are financing, this seller’s market has been deluged by cash buyers and investors. More and more, buyers are finding it necessary to make super-strong offers, in many cases over asking price. If there is a silver lining for buyers, it has to be the super low mortgage interest rates.
One thing is for sure: if you’re a homeowner who is looking to sell and then purchase another home, you’re in a really great position. The strong seller’s market will help you get the old home sold faster, and the extremely low interest rates will benefit you in purchasing the new home.
Houston housing market breaks sales records for second consecutive year
The Houston housing market is off to a great start this year. Believe it or not, 2020 was a record-breaking year for home sales, even with the dark cloud of the pandemic rearing its ugly head. According to Houston Area Realtors, 96,151 single-family homes were sold in 2020 versus 86,996 in 2019, the last record-setting year: a more than 10% increase.
The designation of real estate as an essential service gave the industry a much-needed boost after the March and April stay-at-home orders eased up. Interest rates were already low, and buyers were out in force to take advantage of the new market landscape. Virtual home showings and open houses were in full swing during the stay-at-home period, but continued to flourish throughout the remainder of the year. The chart below compares the total numbers from 2019 and 2020:
HAR.com, January 2021
An unfortunate downside to that record sales activity last year is that now the inventory is significantly lower than normally expected this time of year. But things are still bright, since interest rates are still very desirable. And patience does eventually pay off if you’re still looking for that perfect home.
Historically low interest rates vs the pandemic
The current pandemic has darkened our lives in so many ways that it’s almost unimaginable. Countless lives lost, hospitalizations, businesses going bust, and loss of livelihoods have taken their toll. And even with the new vaccine, we are still not out of the woods. One positive thing has happened, however: historically low interest rates have caused a jump in home sales and refinances.
Super low interest rates have given the housing market a kickstart, almost like never seen before in recent history. For example, the rate for a VA Streamline 30-year fixed refinance has been 1.75% for several weeks. Buyers have been out in force actively hunting for the best homes.
“The housing market is likely to do well in the next couple of years,” according to Ralph McLaughlin, chief economist with Haus, a financial technology company. The overall outlook for the housing market remains positive. However, if unemployment doesn’t recover soon, the number of foreclosures could rise significantly.