Thinking About Buying or Selling in 2021? Here’s Why You Shouldn’t Wait Until Spring to Get Started!
The real estate market seemed to defy all logic in 2020.
The perfect storm of critically low home inventory, record-low mortgage rates & the increasing need for more space made for quite an exciting [& frustrating] year for both consumers and real estate professionals.
In the Monmouth & Ocean County NJ area, we saw a median price increase of 15% for single family homes, 9.7% for condominiums and 14.3% for adult communities.* On the flip side, 30-year fixed rate mortgages are averaging around only 2.65%**, essentially off-setting the rising prices for Buyers. Although we’re technically in a Seller’s market, [patient] Buyers are still winning.
So why should you consider buying or selling a home this winter?
Mortgage rates are crazy low
In a nutshell, money is cheap — the cheapest it’s EVER been. Mortgage rates hit an “all-time low” a whopping 16 times in 2020 and is currently averaging around just 2.65% for a 30-year fixed rate mortgage! To put things into perspective, rates were averaging ~8.00% in 2000, and ~4.50% as recently as 2018. If you purchased a home in 2000 for $400k at 8.00% with 20% down, you’d be paying ~$1,000 more per month than if you purchased that same home today. Experts predict rates will remain low in 2021, but there’s no guarantee they’ll stay THIS low. Savvy Buyers know that low rates = more buying power and want to make sure they snag their dream home while it’s still within reach.
Let’s talk home equity growth
Rising equity opens up an amazing opportunity for sellers in today’s market. What is home equity? It’s essentially the money you “get out of your house” when you sell or if you leverage it for a home equity loan / line of credit. To calculate, you’ll take your home’s current market value - the amount you owe on your mortgage and any other liens (- closing costs & Realtor commissions if you’re selling). Equity fluctuates over time as you make payments on the mortgage and as the fair market value of your home adjusts. CoreLogic reports that homeowners gained an average of $17,000 of equity last year and sellers are quite literally “cashing in” on the opportunity.
Home prices continue to appreciate [rise]
Rising home prices are actually good news for both Sellers and Buyers right now. Sounds strange, but here’s why: While rapid appreciation in 2020 is allowing Sellers to “cash in” on their home’s equity, Buyers purchasing with such low mortgage rates this winter should factor in the expected continued appreciation. Experts predict 2021 can see anywhere from 2-4.5% additional appreciation, which for Buyers would mean an immediate gain in equity. Bottom line is home prices may be rising, but it’s still very affordable to purchase given the low mortgage rates & consistent appreciation.
There’s a serious lack of homes for sale
Nationally, we’re experiencing a record-low 2.3 month supply of home inventory - not even half of the 6.0 month supply that we need to maintain a “neutral” market. If you’ve been searching for a home lately, you know that we’re certainly feeling the results of this shortage in our own NJ markets. Most homes will receive multiple offers and select one within days. Simply put, there just aren’t enough homes for sale to keep up with Buyer demand. The winter offers a great opportunity for Buyers to have slightly less competition and for Sellers to attract mostly serious, qualified Buyers who are ready to make an attractive offer.
If you’re thinking of making a move this year, let’s start the conversation now. Whether you’re on the Sell or Buy side, I can help prepare you for a successful real estate deal in 2021. For Buyers, you want to make sure all of your “ducks are in a row” so when the time comes you’re in a position to make a quick offer. For Sellers, having a no-obligation home evaluation completed will give you the information that you need to get the most equity out of your home. Even the smallest tweaks can take your list price to the next level.
Please, don’t hesitate to call, text or email me with even the smallest questions or to get started with your 2021 real estate goals. I can be reached at:
732.330.0915
nicole@nicolevalentinehomes.com
Read more about the current market in the Keeping Current Matters article “Why Not to Wait Until Spring to Make a Move” - by KCM Crew
*Data provided by New Jersey Realtors® 10k reports , current as of December 20, 2020.
** Average rate provided by Freddie Mac’s latest Primary Mortgage Market Survey, sourced from Forbes.com.
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