We’re beating a dead horse, but the real estate market continues to astound and confound; despite new record-low inventory, home appreciation and home sales have continued to increase.
According to the National Association of Realtors (“NAR”), the median existing home price in December 2020 was a full 13% higher than it was in December 2019, coming in at $309,800, nationally. The same time comparison shows that existing sales increased by 22% to a seasonally adjusted annual rate of 6.76 million (though December 2020 represented a national decrease of .7%, and a 1.4% decrease in the Western Region, from November 2020).
This “slow down,” if you can call it that, is partially driven by a new-record-low inventory. National inventory of homes for sale decreased by 16% between November 2020 and December 2020 (which tells us that even though we saw a .7% decrease in sales, demand is still outpacing supply in a significant way). Further, December 2020 saw a 1.9-month supply of homes for sale (a 6-month inventory is indicative of a balanced market).
While things are looking up, the decrease in mortgage applications should not be ignored; this could indicate that lenders are implementing stricter lending policies, or it could indicate that the market is cooling. It stands to reason that we will see a proportionate decrease in new construction, and the entire real estate market will feel the ripple effect of that slowdown. This is not to say that the housing market is no longer a strong investment, it simply means that the “boom” is slowing down; the market will stay hot through at least Summer 2021.
Most experts predict that mortgage rates will remain low, and Spring 2021 will be a good season for the housing market as people come out of their shells post-vaccination. While supply-side issues remain a problem, sellers continue to benefit from this ongoing dilemma.
At the Chernov Team we understand that knowledge is power, and knowledge of how the real estate market is behaving is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.