August Real Estate Update
This past year has certainly been the year to sell! Low inventory in central mass, low interest rates and a growing number of buyers wanting to move to our area, has increased home prices dramatically. But, for buyers, it can be difficult to achieve your dream of home ownership. According to the Chief Economist at The National Association of Realtors (NAR) Lawrence Yun, nationwide in April this year we averaged 17 days from a seller listing their house with a real estate agent, to it being under contract with a buyer. This is the fastest rate ever. As of mid-July, my average days on the market from the day I list the house to the day we sign the contract for 2021 is 6 days. These listings were primarily in Sterling and Princeton (one in Holden, one in Westminster and one in Leominster). So, with the average only being 6 days available, buyers have needed to act fast and submit extremely strong offers to win the house.
Many people have asked me if I think this is going to be similar to the 2008 market turn where house values dropped. In my opinion, this does not look likely. The 2008 crisis was caused by the banking industry giving mortgages to buyers that stretched their resources too much. These were loans that should never have been approved based on the buyer’s debt, income or credit scores. Banks were too lenient with the loan requirements and approved loans that should have been denied. The market increase we are experiencing now does not have those issues with loans, we are also experiencing a housing shortage which is completely different than the 2008 market. In the years leading up to 2008, builders were building more houses than needed in this area. According to the National Association of Realtors (NAR), in 2006 we had a 2.1 million surplus in housing. By 2015, we had a shortfall of 2 million houses nationwide and by the end of 2020 we totaled 4.8 million homes short of demand. With the current shortage nationwide and locally, it is unlikely home prices are going to decrease any time soon. Builders have increased the number of houses being built each year but with building material shortage it will take a few years to build back up the inventory necessary to meet demand. Many buyers are looking to purchase land and build their dream house either now or down the road. But, land in this area is also selling at a premium. I have been working on a large land project for a couple years and our lots have been selling anywhere from $150,000 to $250,000 for 2-3 acre lots. The interesting part is that many of them are selling before they even get listed. I have a waiting list for buyers looking to purchase as soon as the next one becomes available. So, the land market is just as competitive as the housing market in our towns.
The good news for sellers is that NAR anticipates the median home price to remain strong through the next year at least. The good news for buyers is that the chaos of this market with “speed buying” and multiple offer bidding wars should tapper off. But interest rates are not expected to stay as low as they currently are so buyers need to decide if they want to buy while the rates remain historically low or wait for more inventory to become available to find their dream home.
My advice for buyers is to keep looking. Try to be patient with multiple offer bidding wars. But, if house prices are staying the same for the foreseeable future, there is no reason to wait to buy. You will only pay more in the long run if you wait, and the interest rates may increase. For more tips on making a strong offer, check out my website www.karenpackard.com and look under my blogs for Tips For Making a Strong Offer in a Seller’s Market. If you have any questions or would like to meet for a consultation, you can email me at email@example.com or call/text 978-407-2568. Happy House Hunting!