What is Driving the Housing Market in This Pandemic?

Clients call me and ask. “I heard that people are offering up to $400k over a home’s asking price. Is this true”?

Yes! In some cases, there are up to 50 offers on one home! So, the obvious next question is why? And should I sell?

To help answer the first question as to why. Here are the data and facts. The National Association of Realtors (NAR) began collecting data on national home sales in 1982. They record how many homes were listed for sale each month of each year, how many sold, how long they took to sell, and other interesting statistics.

I felt the stress of low inventory these past few months, but the NAR latest report explains why. Our inventory has not been this low since 1982 when they began collecting housing data. Think about it, we have not had inventory this low for at least 39 years! As a result of our low inventory, we have seen prices rise.

In fact, Seattle home prices are climbing as the second-fastest rate in the nation right behind Phoenix Arizona. It is a simple case of supply and demand. Why is the demand so great? Even before COVID-19 we were facing a housing shortage in the Puget Sound Region. Technology companies were expanding and hiring people who moved here, needing housing. Seniors are working longer, staying in their home (aging in place), or moving here from other areas to be near their children and grandchildren.

Then COVID-19 hit, our economy shut down and people began working and schooling from home. Many notice and feel that their home was not set up for this new arrangement. They began searching for homes with more space for office work, homeschooling, and in some cases, a home gym. Some office workers were told they could work from home indefinitely, so they began thinking about a move away from the city or suburb.

Interest rates further fueled the demand for housing with rates dropping a full percentage in the past year. In case you were wondering how much difference a percentage makes:

• $700k mortgage at 3.5% for 30 years = $3143.31 payment
• $795k mortgage at 2.5% for 30 years = $3141.21 payment

In the above example, for the same monthly payment you can afford about $95k more house! This is why many people are thinking that now might be a good time to purchase. When will rates be this low again? Could now be the best time to buy and lock in historically low rates?

For those that purchased your home when you did, I am sure you are thankful you are all settled and cozy. Others may have been in their home awhile and may have recently considered making a move. If you have wondered if now the right time is to move, I would love to talk to you!

There has never been a better time to sell!