Q: How Has COVID Affected Our Market?
Here’s what the latest stats say about our market.
How is COVID affecting the real estate market? Let’s dive into the latest statistics and how they compare with where we were at last year:
- Home sales have increased by 11% per month
- Inventory is down by 27%
- Homes are selling 15% faster and averaging just seven days on market
- The average sale price has increased by 15%
Much of this activity is due to low interest rates and homebuyers migrating to our area from other places. What do these numbers mean for sellers? Let me tell you a story about one of our team’s sellers who lives in Gilbert.
We listed their home on a Wednesday and didn’t allow any showings until Saturday. That day, we told all buyers who showed up (of which there were many) to submit their highest and best offers on Monday. In that small time frame, we generated 12 offers. After I sat down with the seller and outlined the advantages and disadvantages of each offer, they picked one that was extremely aggressive. The buyer behind this offer had already lost out on three homes, so they offered to pay $20,000 over list price and waive the appraisal.
You have the equity to be competitive for the home you want.
To review: This seller sold their home for $20,000 over list price (which was well above the appraised amount) after having it on the market for just four days. We also helped them quickly find and close on their next home in Gilbert. This story is a common occurrence for sellers in today’s market. Buyers are being ultra-competitive to get the home they want.
Who should be selling right now? Anyone with a non-owner-occupied home, a home that’s struggled selling in the past, or one that they don’t want to update anytime soon. Additionally, anyone who just wants a quick sale so they can move on to their next residence should sell too. You have the equity to be competitive for the home you want.
What about buyers? Why are they buying homes much faster than last year? Like I said, interest rates are low. As home prices have increased, interest rates have decreased. Every 1% drop in rates amounts to about 10% less that you have to pay for your monthly mortgage payment. For example, if you could only afford a $300,000 house in 2018, you can now buy in the $330,000 to $360,000 range because rates have dropped between 1% and 2% since then. Even if you pay a higher price for a home now, you’ll pay less on the back end of your mortgage.
Another factor I already mentioned that’s worth repeating is the number of buyers coming from high-priced markets like New York, Washington, etc. Also, many people who planned on getting married in 2020 but weren’t able to are using the money they would’ve spent for a down payment.
Who should be buying in this market? If you plan on being in your next home for five years or longer, then go ahead and buy. You’ll reap the benefits of low interest rates, and if the market takes a dip, it wouldn’t affect you that much because you’d be able to stay in your home until it was time to sell it.
If you’d like to know more about our market or are thinking of buying or selling soon, don’t hesitate to reach out to me. I’d love to help.
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