Summer Market Outlook
What Will Our Summer Real Estate Market Bring?
As the roll out of COVID-19 vaccines are providing us all with hope that we may be at the end of the pandemic, housing market trends caused by this difficult time are expected to continue for some time.
As we enter the hot summer market, U.S. News has predicted:
- Interest rates may rise slightly, but are expected to remain relatively low.
- Home inventory will increase, but it will stay a seller's market.
- Homebuyers will still be focused in the suburbs, but interest in city living will see some revival.
We all entered 2021 with pandemic fatigue. However, it is well documented that the isolation of 2020 brought out buyers looking for more space and private property in record numbers. This did not slow as we entered into 2021. The first months of the year saw rapid growth in home prices as low inventory of houses on the market combined with high buyer demand created fierce competition across our area. For the First Quarter of 2021, Bright MLS reported a 62.2% decline in homes for sale this year for Wicomico County vs. the same time period last year, while home sales were up 31.2% and the median home price up 14%. What is more, this trend was nationwide. Prospective buyers shopping this past spring across the nation had 52% fewer homes to choose from than at this time last year, according to Realtor.com's Monthly Housing Trends Report.
Experts are weighing in on how our summer market on Delmarva will play out for buyers and sellers:
The coronavirus pandemic drove mortgage interest rates to historic lows for most of 2020, and the new year started off with a new record low for interest rates for 30-year, fixed-rate mortgages when Freddie Mac reported the average interest rate was 2.65% in early January.
While COVID-19 drove mortgage interest rates to historic lows last year, rates have trended upward this past spring. In April, Freddie Mac reported the average interest rate for a 30-year, fixed-rate mortgage was 3.13%. That said, rates continue to remain at all time lows.
These low interest rates have made housing opportunities more within reach of many renters who have had to contend with constantly rising rents and tight quarters.
Continuing to drive our seller’s market is the influx of younger buyers. Millennials, who have been known to get out and enjoy their income on luxury experiences such as fine dining, cars and vacations before spending money on a home purchase have been in a position during isolation to save money. Coinciding with this group now starting families, these savings are bringing millennials out in force.
The number of homes on the market in March this year was 52% lower than in March 2020, according to a report from Realtor.com. This echoes the Wicomico County Bright MLS statistic mentioned earlier of a 62.2% decline. Low
inventory and bidding wars have not only driven up prices but kept many buyers without a home. These buyers will continue to search throughout the summer months.
Homebuyers can expect to continue to compete with others when making an offer on a property. Be prepared that your home search may take longer and that you may lose out to competing offers on a few homes before your offer is accepted. Going into your home search understanding these parameters will make the process less stressful.
The pandemic can also be thanked for the low supply of homes on the market in 2020.
Homeowners, particularly those comfortable with how their current property met their new need for remote work space and virtual schooling, were not interested in opening up their homes to strangers and risk spreading the virus.
As we all grow hopeful for an end to the pandemic, area sellers seem more inclined to enter the market. A recent Realtor.com report notes that while the number of new listings earlier this spring was 20% lower than the number for the same time period in 2020, the decrease is not as steep as the first quarter’s new listings number.
Experts agree: consumer confidence, the rollout of vaccinations and declining unemployment numbers make selling a home less risky.
National statistics show an increase in inventory in the spring. However, the Wicomico County 1st Quarter Stats showed a 1.3 Month supply of inventory, which is a whopping 69% less than 2020's first quarter!
The time to list your home is now, especially second homes or investment properties. Sellers, you will continue to have the upper hand!