There’s been lots of buzz since early 2020 about a “Seller’s Market”, if you haven’t heard this term you’re either living under a rock peacefully ignoring the relationship between the housing market and our economy. You might be one of the few people who are actually content with their home and not scrolling Zillow or Realtor.com on the nightly for the next shiny new home to hit the market. My sincerest hope is that you’ve been happy in your home since the start of our Seller’s Market, because every Seller turns into a Buyer, and Buyers are fighting for anything that’s hitting the market.
How did we get here?
January 2018-2019 were very strong Buyer’s markets, blog post on that season to come, but basically it’s a high supply of homes with low demand. More homes to buy than there are Buyers in the market.
January 2020 we saw all of the excess inventory from the previous two years bought up. Right after the excess inventory going off the market COVID hit and the Federal Reserve lowered mortgage rates to *new* historical lows. The Fed did other things like interject cash into the economy which gave people more cash on hand to buy along with lower interest rates. Think between 2%-4%….shattering the previously historic low rates between 3%-5%. This caused a massive influx of buyers into the housing market. All kinds of buyers: the first time buyers, the “I’m ready to downsize and retire” buyers, the family buyers who have been waiting for their moment to own more space, the investor buyers, the out of town buyers, the second home buyers, and so many more buyers! Not all of these buyers had something to sell so the supply couldn’t keep up with the demand.
When supply can’t keep up with demand, those selling hold more power because of the demand for the product. I’m no economist, but I can explain how this impacts the housing market: this causes a rise in property values, encourages cash buyers, and lots of competition.
While sellers theoretically have more “power” in a Seller’s Market they still need to prepare their home to sell. To draw demand you have to have something lots of other people want. A dumpster fire of a house isn’t the goal for most buyers, and thus, isn’t getting the same demand as a beautifully renovated four bedroom three bathroom house in a desirable neighborhood.
Enter appraisers, the “all-knowing” opinion of the market. Appraisers give an opinion of value on a home for the bank to verify that the quality of the home matches the purchase price. Appraisers and their process deserve another post all on their own. For our purpose I will keep it simple- appraisers compare the subject home to other homes similar in location, size, and condition that have sold. If it doesn’t compare then the purchase price can get adjusted. In our current seller’s market we are seeing lots of increase in appraised values because of the demand.
Navigating a Seller’s Market from both the selling and buying side requires a professional real estate agent who can advise you on the best path to take through the process. I help my clients get top dollar for their homes in record time and would be happy to represent you too.