2020 was a record-breaking year for real estate. Nationwide, the pandemic drove total home sales to their highest level since 2006 (National Association of Realtors). In our luxury markets, sales went up 209% from that same year and 51% from 2019. Given these impressive results from an unprecedented year, it is amazing to hear that there’s still room for the economy to grow.
In an interview with 60 Minutes, Jerome Powell, the chair of the Federal Reserve, said that with widespread vaccination and strong fiscal and monetary policy support, “the economy’s about to start growing much more quickly and job creation coming in much more quickly.”
Chairman Powell notes that private-sector forecasters and members of the Fed’s rate-setting committee are predicting 6% to 7% growth this year, the highest level in 30 years.
Just think back to the “bad old inflation days” of the late ‘70s and early ‘80s when people were taking out mortgages near the Fed’s benchmark interest rate of 20%. Now, it looks like the Fed will hold rates at historically low levels into 2023.
What does this mean for the housing market? It’s going to stay competitive. With economic outlooks continuing to rise and the mortgage rates staying low, more and more buyers will be on the hunt, but inventory is remaining low.
“The triptych of housing demand, economic growth, and lumber shortages has put tremendous pressure on single-family housing,” notes Joe Taggart, LandVest’s President. “New housing starts are 3x the 2009 rate, while the cost of lumber has increased 100%. When you layer in supply chain disruptions, it is driving more buyers into competition for a limited pool of existing homes”.
With an average of four offers for every home sold, buyers are expected to pay at or above the asking price and move quickly. For sellers, this is your market: low inventory and high demand work in your favor.
“For homeowners thinking of selling, we are counseling that they do it now, especially if they have a place to go which is one of the main reasons holding back many sellers. For buyers, we are counselling them to act quickly, limit contingencies, with offers above asking for the right properties. For sellers thinking of downsizing, the urban condo market is one of the few value opportunities for buyers, but that likely will not last beyond 2021,” says Slater Anderson, Managing Director of Real Estate at LandVest.
If you’re ready to make your next move or want more information on a specific market, contact Slater.