A pandemic housing boom has made Americans house-rich. Does that make it a good time to sell a house — or is it more complicated? —-
You might not be getting out much, but have you noticed home values lately? On the heels of a gangbusters year for housing, Americans are house-rich. A report from CoreLogic recently revealed that homeowners enjoyed an average annual equity gain of $17,000 in Q3 2020, pushing equity levels to record heights nationwide.
But as home prices across the country surge, so do intense waves of coronavirus cases. Complicating matters further, the pandemic home buying rush has left inventory severely depleted. While you could sell your house at a premium, some sellers will find that they’ll have nowhere to go as supply levels reach all-time lows. Others may still feel skittish about listing while infection rates remain so high.
So is it a good time to sell a house, or will the move leave you in the lurch? Here are some key factors to consider:
Local home values: Will you make a good profit?
The opportunity to sell a house looks sweeter when you’re on the heels of a long price run-up. It’s the old “strike while the iron’s hot” mentality. So where do home prices stand?
In HomeLight’s Q4 2020 survey of over 1,000 top real estate agents, 74% of respondents said that home prices were on the rise in their area, in spite of the winter season. What’s more, 48% of agents believe home values in their market will continue to climb over the next six months, and 46% noted bidding wars were increasing in their market.
As far as prices a year ago versus now, the National Association of Realtors (NAR) reports that the median existing home price increased 12.9% year over year in December 2020 to $309,800. Another study by Renofi found that over the past 10 years, home prices in the U.S. have increased by nearly 49%.
By that measure, a house someone bought in 2010 for $250,000 would be worth approximately $372,500 today.
However, real estate is local and in many cases, hyper-local. To get a sense for how fast home values have appreciated in your area, check your local Realtor association website for information. Many Realtor boards publish monthly market reports featuring data on local home prices and days on market trends to give you a more precise gauge of market temperature.
When you’re ready, you can also plug a few details about your property into our Home Value Estimator for a quick price check-up.
Purchase demand: Will you find a buyer?
As a homeowner, you are the envy of many right now. There are a lot of cramped apartment and townhouse dwellers who would snatch up your digs in an instant. And that goes double if you have any of the following features:
- A detached home
- Ample square footage
- Enough bedrooms for a home office
- Any kind of dedicated outdoor space
- A suburban location
“The trend right now is moving out of the city,” echoes Martin Tokos, a real estate agent who works in and around Boston.
Purchase demand has reached an all-time high. The Mortgage Bankers Association’s weekly survey indicated a record demand for mortgage applications. The association saw a 42.2% year over year rise in applications between December 2019 and December 2020, one of the sharpest increases ever recorded by the association.
The surge in demand is partly due to the historically low interest rates and the drive many feel to find a home with more space for remote work, virtual learning, and recreation at home.
Additionally, the number of first-time homebuyers has steadily increased over the past year, peaking at 36% of total homebuyers in April 2020, according to NAR. As first timers enter the market, they don’t unlock any inventory when they make a purchase. This has only contributed to the supply and demand imbalance, and driven up purchase demand even higher.
A spike in buyer demand signals a seller’s market for many cities. In fact, 92% of real estate agents in HomeLight’s Q4 2020 report described conditions favoring sellers in their locale, putting homeowners in the driver’s seat when it comes to negotiations. For reference, only 48% of agents reported the same during the same period in 2019.
Inventory levels: Will your house be a shining star?
To understand the current state of housing inventory, picture an empty retail display left haphazard and empty after Black Friday. Your house, if you list it now, is like the sole handbag left in the back that the employee puts out last minute. As soon as it hits the shelf, it’s going to get snatched up, even if it has a few dings and scratches.
“I would say our housing inventory right now is down by at least 50% compared to last year, if not more. There’s hardly any inventory,” says top-selling Austin, Texas, real estate agent Jessica Trad. “I’ve been a Realtor almost 19 years, and this is the craziest time I have ever seen.”
Agents in the HomeLight network across the country echo the same feeling. In our latest survey, 82% of agents indicated inventory was lower than expected for this time of year, compared to just 46% last year.
While low inventory translates to a fast and lucrative sale for you as a homeowner, it also puts you in a tough position if you’re trying to buy a new home.
You should have a plan for where you’ll stay if your home sells faster than you expect. Another option may be to negotiate a rent-back agreement with a buyer to stay in the home an additional 30-60 days past closing, giving you the time to line up your next place.
Your comfort level: Are you worried about safety?
There are some challenges to selling your home right now, and it’s understandable in the time of COVID-19 that not all sellers will feel comfortable letting buyers into their homes yet.
If you want to list your home during this time, consider these tips to make it a safe process:
- Lean into digital marketing. Work with your real estate agent to create a strong digital presence for your house online. Adding a 3-D virtual tour, professional listing video, or a pre-recorded walkthrough to your listing can help cut back on the need for physical showings.
- Work with a Move Safe Certified Agent. HomeLight’s Move Safe Certified agents have been identified as using the best tools, technology, and practices to keep buyers and sellers safe during COVID-19. A Move Safe agent prioritizes digital tools and virtual closings, as well as cleaning the property between showings.
- Move out during the listing period. As an extra safety precaution, some of Trad’s have decided not to stay in their home while it’s actively being marketed and shown to buyers. “Some sellers have been putting their things in storage and living with a friend or family member until the house sells,” says Trad. This makes it easier for buyers to see the property in person, and eliminates stressors for sellers.
- Go off-market. If you’d prefer to sell without a single buyer stepping into your home, you can opt for a non-traditional listing process and pursue an off-market sale. With HomeLight’s Simple Sale, your property can fetch an all-cash offer between 90%-95% of the market value range — all without a single in-person showing.
Your next move: Are you relocating?
For most of the country, the data shows that now could be a great time to sell your home and cash out at a high point. However, by that logic, once you sell, you’ll become a buyer in a competitive market. This may present more of a roadblock for some sellers than others depending on where you’re leaving and where you’re headed. Consider these scenarios:
You wish for warmer weather or more space in the ‘burbs.
According to our latest research, 66% of agents report an increase in buyer demand for second homes, especially those close to a beach with warm weather. Others are eyeing the suburbs for more square footage. HomeLight’s Q2 2020 survey found that 44% of agents report a “need more space” as a primary moving motivator.
“I’ve had sellers move to Miami or leave the market to head somewhere more affordable,” Tokos shares.
Either of the above trends sound like you? That could mean you’re entering a tight real estate race for your dream home. However, don’t let the fear of striking out keep you from playing the game.
The renewed flexibility of remote work is a once in a lifetime chance to redesign your life based on where you want to live. Diving into today’s fast-paced market could be worth it to see your dream realized.
You could significantly reduce your cost of living.
In Austin, Trad has experienced few different seller profiles in the time of COVID-19. With the announcement of permanent work from home for many, there’s been an influx of buyers from high cost of living cities like San Francisco taking the proceeds from their sale on the coast to a city where their dollar goes further.
Meanwhile, as transplants move into Austin proper, Austin residents are selling their home and moving to the city outskirts where they find larger homes and more outdoor space. If you’re newly untethered from the office, it could be worth exploring how selling your home could position you to spend less on housing elsewhere or improve your quality of life at a lower cost.
You have a chance to zig while everyone else is zagging.
Trends might be driving buyers to warmer weather and suburban neighborhoods, but if you’ve always dreamed of living in the city, now could be a perfect time to get a deal on a property close to the hustle and bustle we expect to see post-pandemic.
According to HomeLight’s survey, 49.7% of agents have seen temporary and permanent business closures drive down interest in nearby residential real estate. That drop in interest could mean being able to buy a property you couldn’t have previously afforded.
Right now, urban inventory could be easier to buy, and these trends won’t last forever.
“There are just too many new and beautiful developments in Boston, and the city has so much to offer, it’s an incredible place to live,” Tokos says. “I would be very surprised if at some point that market will not bounce back.”
What local experts advise: Have you talked to an agent?
Now could be an excellent time to sell your home, but as the coronavirus crisis continues, it may be equally tempting to stay put. Sometimes the best place to start is by gathering more information.
For that we recommend connecting with a local real estate agent to weigh your options more in depth. Find out what your house is worth, do a little research on the market, and think about what you want for your future. As the world goes remote, the possibilities just got bigger.
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