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As we enter the final months of 2020 and continue to work through the challenges this year has brought, some of us wonder what impact continued economic uncertainty could have on home prices. Looking at the big picture, the rules of supply and demand will give us the clearest idea of what is to come.
Due to the undersupply of homes on the market today, there’s upward pressure on prices. Consider simple economics: when there is high demand for an item and a low supply of it, consumers are willing to pay more for that item. That’s what’s happening in today’s real estate market. The housing supply shortage is also resulting in bidding wars, which will also drive price points higher in the home sale process.
There’s no evidence that buyer demand will wane. As a result, experts project price appreciation will continue over the next twelve months. Here’s a graph of the major forecasts released in the last 60 days:
Some are concerned that homeowners who entered a mortgage forbearance plan might face foreclosure once their plan ends. However, when you analyze the data on those in forbearance, it’s clear the actual level of risk is quite low.
Ivy Zelman, CEO of Zelman & Associates and a highly-regarded expert in housing and housing-related industries, was very firm in a podcast last week:
“The likelihood of us having a foreclosure crisis again is about zero percent.”
With demand high, supply low, and little risk of a foreclosure crisis, home prices will continue to appreciate.
Originally, many thought home prices would depreciate in 2020 due to the economic slowdown from the coronavirus. Instead, prices appreciated substantially. Over the next year, we will likely see home values rise even higher given the continued lack of inventory of homes for sale.
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Every day in the U.S., roughly 10,000 people turn 65. Prior to the health crisis that swept the nation in 2020, most people had to wait until they retired to make a move to the beach, the golf course, or the senior living community they were looking to settle into for their later years in life. This year, however, the game changed.
Many of today’s workers who are nearing the end of their professional careers, but maybe aren’t quite ready to retire, have a new choice to make: should I move before I retire? If the sand and sun are calling your name and you have the opportunity to work remotely for the foreseeable future, now may be a great time to purchase that beach bungalow you’ve always dreamed of or the single-story home in the sprawling countryside that might be a little further out of town. Whether it’s a second home or a future retirement home, spending the next few years in a place that truly makes you smile every day might be the best way to round out a long and meaningful career.
Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:
“The pandemic was unexpected, working from home was unexpected, but nonetheless many companies realized that workers can be just as productive working from home…We may begin to see a boost in people buying retirement homes before their retirement.”
According to the 20th Annual Transamerica Retirement Survey, 3 out of 4 retirees (75%) own their homes, and only 23% have mortgage debt (including any equity loans or lines of credit). Since entering retirement, almost 4 in 10 retirees (38%) have moved into a new home. They’re making a profit by selling their current homes in today’s low inventory market and using their equity to purchase their future retirement homes. It’s a win-win.
The health crisis this year made us all more aware of the importance of our family and friends, and many of us have not seen our extended families since the pandemic started. It’s no surprise, therefore, to see in the same report that 32% of those surveyed cited the top reason they’re making a move is that they want to be closer to family and friends (See graph below):
The survey also revealed that 73% percent of retirees currently live in single-family homes. With the overall number of homes for sale today hitting a historic low, and with the buyer demand for single-family homes skyrocketing, there’s never been a more ideal time to sell a single-family home and make a move toward retirement. Today’s market has the perfect combination of driving forces to make selling optimal, especially while buyers are looking to take advantage of low interest rates.
If you’re one of the 73% of retirees with a single-family home and want to move closer to your family, now is the time to put your house on the market. With the pace homes are selling today, you could essentially wrap up your move – start to finish – before the holidays.
Whether you’re looking to fully retire or to buy a second home with the intent to use it as your retirement home in the future, the 2020 fall housing market may very well work in your favor. Let’s connect today to discuss your options in our local market.
Buyers are actively searching for their next home, and your house may be it. If your own needs have changed and you've been considering a move, let's connect to get your house on the market this fall.
I had the best time working with this family on making their dream come true! Having grown up on acreage property, but living in the city for the past 10 years, this family decided it was time to find their long term home, with a little land, yet close enough to the city for an easy commute to work.
Fortunately, in this active real estate market, they were able to buy without needing to be contingent on the sale of their current townhome. Their offer was selected out of six competing offers! With excellent cooperation between all parties, we had a smooth transaction from beginning to end.Also, fortunately, we listed their townhome for sale within a week of getting their offer accepted. Selecting the best option from several offers, and again with excellect cooperation between all parties, we were able to close on the sale of their townhome within 2 weeks of closing on the purchase of the acreage property - what timing!
Best wishes for many happy memories in your new home - complete with vegetable gardens, open skies, room for sophie (cat) and George (dog) to roam and play, trees for privacy.... and a handful of chickens! Enjoy~
Once the kids have left the nest, you may be wondering what to do with all of the extra space in your home. Chances are, you don’t need four bedrooms anymore, and it may be a great time to sell your house and downsize, maybe even into a single-story home. You’ve likely gained significant equity if you’ve lived in your home for a while, so making a move while demand for your current house is high could be your best step forward toward the retirement goals you set out to achieve several years ago.
The dilemma, though, is where to go next. A big concern for many homeowners who are ready to sell is finding a home to move into, given today’s lack of houses available for sale. There is, however, some good news: the number of single-family 1-story homes being built today is on the rise, improving your odds of finding the right home for your changing needs. In a recent article, The National Association of Home Builders (NAHB) explains:
“Nationwide, the share of new homes with two or more stories fell from 53% in 2018 to 52% in 2019, while the share of new homes with one story grew from 47% to 48%.”
Here’s a map showing the breakdown of newly constructed homes being built by region, and the percentage of 1-story and 2-story homes in that mix:
What are the benefits of buying a one-story home?
Still not sure about buying a single-story home? An article from Home Talk covers several advantages of switching from two floors to one:
1. Energy Efficient
It is easier to heat and cool a single-story house [than] it would be to regulate the temperatures of a multi-story house. Most single-story homes only need one heating or cooling unit, and they typically stay cooler than a two-story home, both of which can lead to significant savings.2. Easier to Maintain
Doing a general cleaning in a single story requires less effort and you will be able to see all areas that need cleaning and the areas are easily accessible.Cleaning and maintenance of a single-story home can take less time and effort, and better upkeep helps improve the overall value of the home.
3. Accessible for Everyone
A single-story house can be accessed by anyone, whether they are young children or the senior citizens. If you’re looking for a house that provides a safe and easily accessible environment at any age, a single-story home may be optimal.4. Good Resell Potential
When buying a single-story house, you should consider the resale value should you think of reselling it in case of a circumstance that can happen. Look at the growth rate of that area. Due to the high demand of these types of houses it is [easy] to resell them and depending on the growth rate of an area, it increases in value significantly. Single-story homes have a lot of benefits and are often in higher demand. This bodes well for future resale opportunities.There are many benefits to downsizing into a one-story home. Doing so while demand for your current house is high might make it easier than ever to make a move. Let’s connect if you’re ready to purchase the single-story home you need while homes are so affordable today.
Holiday shopping can get exhausting - even during a normal year! The earlier you start, the easier it is to check everyone offer your list without having to scramble the day before a gift exchange. And while the situation this year has changed a lot about the way we shop in-person, you can still get your friends and family a heartfelt gift from other sources!
The sooner you start your gifting process, the less stressed you will be once the holidays really kick into high gear. And remember, no matter how you end up giving to yoru friends and family this year, it's the thought that counts!
