Spring is in the air, and most of us couldn’t be more ready for warmer weather, budding flowers, and chirping birds! This time of year is a delight for the senses, and it is traditionally also a great time to sell your home. This year, however, springtime may be an especially good time to list your house on the market.
The residential real estate market in the U.S. is having its biggest boom since 2006. Of course, we all recall just a few years after that when, in 2008, the housing bubble burst, igniting a global recession. But real estate and mortgage experts say that in nearly every way, the current housing market conditions are the opposite of that last ill-fated boom.
Is it the right time to list your home for sale?
If you are a senior who is considering a move to a life plan community (also called a continuing care retirement community, or CCRC) or other type of senior living community, this could be an ideal time to list your home for sale as a number of factors converge to create a hot real estate market for sellers. Let’s take a look at some of the reasons for this situation.
High demand, low supply
According to a recent Dow Jones article, despite the pandemic in 2020, sales of previously owned homes skyrocketed last year, reaching their highest level in 14 years, and many experts expect that trend to continue in 2021.
A big reason for the current boom is the low supply of existing homes for sale, causing prices to spike, with the median home purchase price exceeding $300,000 for the first time. In fact, U.S. home sale prices rocketed 10.8 percent in fourth quarter 2020, as compared to that same period in 2019. According to data from the Federal Housing Finance Agency, that’s the largest annual increase since 1992.
A new construction slowdown
Adding to the low supply issue and the resultant higher prices, new home construction hasn’t been able to keep up with demand as shortages of land, skilled labor, and materials hit homebuilders. For example, because of supply issues, the cost of lumber is at an all-time high right now, up a whopping 188 percent since this same time last year, according to Fortune.
New housing starts did rise in 2020, but they were still more than 20 percent below average. And that lumber shortage and resultant higher lumber prices? It’s adding at least $24,000 to the price of the average new single-family home, the National Association of Home Builders estimates.
Low interest rates
Although mortgage rates have inched up recently, and experts expect them to continue to creep up this year, they are still extremely low. The Federal Reserve is forecasted to maintain ultralow interest rates until certain employment and inflation goals are met, which may not happen for quite a while given the state of the nation’s jobs market and overall economy. These low rates make it an attractive time for homebuyers to enter the market, increasing demand.
The so-called “Millennials,” who were born between 1981 and 1996, are currently the largest living adult generation. Members of this group are now reaching their mid-20s to late-30s — prime years for settling down and purchasing a first home. Because the housing market is so under-supplied, these young homebuyers are vying for a limited number of homes, further driving up sale prices.
The pandemic also has contributed to the current real estate boom as some city-dwellers looked to escape crowded urban areas. With more people than ever working from home, many sought homes with more space in the suburbs.
How seniors can take advantage of this sellers’ market
If you are a senior who is considering a CCRC or other senior living community, you may have reasons to delay your move, but selling your home for a good price and in a timely fashion likely isn’t one of them! All of the above factors have created a dream situation for home-sellers.
Consider this: In June 2020, home sales surged nearly 21 percent from May, marking the largest monthly increase on record going back to 1968. That record was broken again in July 2020 when sales rose another 25 percent versus June. The market remains favorable for sellers as supply can’t meet the growing demand, driving up sale prices as we enter the prime spring season.
For seniors, it is also worth contemplating the home equity you have built up over the years, and especially in the past year since many people use their home sale proceeds toward the cost of a retirement community. With home sale prices surging, people who already owned their home gained a collective $1.5 trillion in equity in 2020, according to data from CoreLogic. This number will likely continue to rise into 2021 as the above factors remain in effect.
If you are considering selling your home, reach out to an experienced realtor to discuss the market in your specific geographic area and what price you might expect to garner from selling your home.