6 Surprising Realities About the Real Estate Market Right Now
Think back. Way, way, back to March, when we were all just learning about COVID...
Every hour, there was a new update about the virus, a new round of stay home orders, and lots of predictions about how the economy would weather a pandemic. Back then, there was reasonable concern that the real estate market would crash. The uncertainty made it difficult to even imagine what would happen in the coming months if you were looking to buy or sell a home.
Fast forward to now. No, there hasn’t been a 2008-level crash. In fact, the real estate market is still going strong in many markets. Yet, there are some very big (and surprising) trends going on in our “new normal.” Here are the top six:
ONE | The inventory of homes is still very low
The pandemic basically cut off the spring market before it could really get underway. Few wanted to open their homes to prospective buyers — though the rise of virtual tours made it possible to have the most socially distant open house ever. Still, with the uncertainty of the job market, ever-changing hot spots, and the difficulty of doing all the normal stuff to prep for a sale (decluttering, staging) during stay-at-home orders, only the most motivated sellers listed.
TWO | Interest rates remain low
One of the first big headlines of the pandemic, when it came to real estate, was when interest rates were slashed big time. Of course, many took advantage by refinancing their home. As months passed, though, the continued low-interest rates motivated prospective buyers to enter the market and enjoy the savings.
THREE | There’s a lot of competition if you’re a buyer
It’s not just locals in your market. The shift to remote work means that many people can move to an area they love, not one that is convenient for a commute. Often, these are high wage earners who can afford to submit an offer above asking price — especially if they sold their home at the right time or in a pricey market.
FOUR | Homes are selling very, very quickly
When there are fewer listings and plenty of buyers, your dream home may be a blink-and-you’ll-miss-it opportunity.
For buyers, this means that you should be preapproved (not just prequalified) in order to get your offer considered. For sellers, you may have a little more leeway on things like condition and contingencies.
FIVE | Prices have climbed
All of the above factors have pushed prices higher in most areas. In fact, 96% of cities saw home prices rise between April and June. Markets that didn’t see the same growth were generally ones that had completely shut down during that time (like New York City). Specific to Maui, prices for homes are feeling upward pressure. Which brings me to my last point.
SIX | The Condo Market is a Different Animal
While the home market is seeing extremely low levels of inventory on Maui, the condo market is seeing a significant increase in inventory. The increase is coming on two fronts. The first is the vacation rental condo market. Owning a vacation rental comes with higher overhead. Vacation rental income helps to cover the cost of the overhead. With no rental income, some owners are feeling pain and opting to sell. This isn't happening across the board. Some vacation rental developments continue to have limited inventory. Where inventory is high, there is downward pricing pressure. Where it is low, prices are holding. The other area where inventory is increasing is with lower priced condos geared towards Maui residents. This is a part of the market where local economic conditions are having an impact. High unemployment in the tourism industry is limiting the number of buyers. The industry shutdown is also turning some owners to sellers. Some of these condos are feeling downward price pressure as inventory increases.