2020 was nothing short of challenging for anyone who was thinking of buying or selling a home. With a global pandemic making life and conducting business strange and complicated, home sales were understandably disrupted over the past year.
The real estate market was severely impacted in the Spring of 2020 but began recovering towards the end of the year, making up for some of those losses. If you’re thinking of buying or selling a home in 2021, here are some of the real estate trends that are likely to impact your experience.
Real Estate Trend #1: The Pickings Are Slim
The inventory of affordable homes has been a problem for several years. But it’s never been worse than it is today. Overall, inventory was down 22% in November 2020 year-over-year, meaning there weren’t enough homes on the market to satisfy demand.
What Low Inventory Means for Buyers
If you’re buying a home, you may be in a tough situation. You won’t be able to be as picky with regards to features, but you can instead shop based on location and upgrade later. You might also get a better deal in an up-and-coming neighborhood, so it makes sense to expand your search. Finally, be ready to move fast on offers and make sure you are pre-approved for a mortgage before you begin shopping for a home.
What Low Inventory Means for Sellers
When supply is low, this is the best environment for sellers. It’s your market, meaning you will likely get a flood of offers for your home. But, if you’re upgrading, remember that you will be in the same situation as those buyers that are competing for fewer options.
Real Estate Trend #2: Home Prices Continue to Rise
It’s basic economics: as supply dries up, prices will continue to rise. The median price of existing homes in November grew a staggering 15% year-over-year.
What Higher Prices Mean for Buyers
Buyers will want to act quickly as prices continue to increase. Beyond this piece of sage advice, it’s important to re-assess your budget. What you could afford a year or six months ago might have changed. It’s a good idea to limit your house payment (including property taxes, insurance, and any PMI) to 25% of your monthly take-home pay.
What Higher Prices Mean for Sellers
If you’re selling your home, you can look forward to recording a decent profit on the transaction. This excellent news because you’re going to need that extra money to purchase your next home. Make sure you are working with an experienced real estate agent that knows your market and will help you get the best price.
Real Estate Trend #3: Mortgage Interest Rates Remain Low
Mortgage interest rates remain incredibly low. In fact, the average rate on a 15-year fixed-rate mortgage reached a 30-year low of 2.31% in November. These rates are expected to stay around 3% or lower through 2021.
What Lower Interest Rates Mean for Buyers
As a buyer, you can offset some of that price appreciation with the fact that you can get an affordable mortgage with lower payments. Just remember to consider your overall budget when choosing what size house you can afford.
What Lower Interest Rates Mean for Sellers
While interest rates remain low, this will continue to be an incentive for buyers to go home shopping. But, if rates begin creeping up, homes might take a bit longer to sell, meaning you’ll have to consider offering some incentives for movement.
Get the Professional Real Estate Help You Need in South Carolina
Are you thinking about buying or selling a home in the Lexington area this year? Find out how The Lafayette Team can help. We have more than 17 years of combined real estate experience as well as extensive knowledge of the area (Lexington, Columbia, Irmo, Chapin, Elgin, Blythewood) and its major builders.
Contact us today to learn more about how our team can enhance your home buying or selling experience.