At least for a while, that familiar real estate mantra about “location” may be replaced by one that focuses more on “timing.” Right now — summer 2021 — may be the best time in recent memory to sell a house. And for seniors selling a home, current real estate market conditions have aligned to form the perfect storm to maximize the return on your home sale. Any older adult planning to use the sale of a home to offset senior living community entrance fee expenses should seriously consider listing now. Homes are moving incredibly quickly in this seller’s market — at or above asking price. There are several reasons why we’ve reached this point, why these conditions will probably not last indefinitely, and why anyone planning to sell a senior-owned home should be ready to act now.
Some factors that led us here.
The residential real estate market in the U.S. is having its biggest boom since 2006. Low mortgage rates have boosted demand among buyers, while low inventory conditions have put sellers in the driver’s seat. Let’s look a little more closely at these and other contributing factors.
Supply and demand.
Sales of previously owned homes skyrocketed in 2020, reaching their highest level in 14 years according to an article by Dow Jones. A big reason for this is the low supply of existing homes for sale. According to research by Realtor.com the number of homes for sale nationwide dropped 52% from March 2020 to March 2021. That translates to 534,000 fewer homes for sale this March than there were a year ago. Some metro areas experienced even bigger drops in inventory over the past year. The number of homes for sale in Austin, TX, fell 72.7% from March to March. Jacksonville, FL, and Raleigh, NC, also experienced inventory declines of more than 70%.
Very little new construction.
Compounding the problem of low supply of existing homes for sale, shortages of land, skilled labor and materials have stalled forward progress for home builders. Because of COVID-19 restrictions in sawmills, for example, the cost of lumber is at an all-time high, up a staggering 188% since last year, according to Fortune magazine. That’s a new all-time high that adds at least $24,000 to the price tag of a typical new single-family home.
Will a low-inventory market last?
Right now, sellers are getting multiple bids, cash offers, no-contingency offers, and above-asking-price offers. Once buyers have more options, they’ll also have greater leverage, which will mean more counteroffers, slower sales, and a longer time to close. Sellers will have to work a little harder to find the right buyer. One factor that will likely bring new properties into the market is the backlog of home foreclosures. When COVID-19 hit, the U.S. government issued foreclosure moratoriums to prevent people from losing their homes. Homeowners who were having trouble paying their mortgage could request an extended forbearance that would last until the end of June 2021. For this reason, very few foreclosures have been listed in the past year. But as more of these “short sales” come onto the market and increase the supply of homes for sale, demand for homes listed at top dollar may well decrease.
Another factor affecting inventory? Baby boomers and even some Gen Xers are aging out of their homes. Over the next decade, millions of baby boomers and empty-nest Generation X parents will be downsizing and changing their current living situation. The result will be thousands of additional homes entering the market each year. For seniors who wait to list, they’ll no longer get the value on the sale of their home they would have gotten now.
Which way are rates headed?
One big reason buyers have flooded the market this year is historically low interest rates. Low mortgage rates mean buyers can save thousands of dollars over the lifetime of a home loan, which has convinced many potential buyers who’d been waiting on the sidelines to enter the market. These low rates also mean people can upgrade from their old home to a larger one while maintaining the same monthly mortgage payment. But pendulums swing in two directions, and rates will eventually rise. Similar to having more home inventory on the market, rising interest rates will slow buyer demand. How soon? No one knows, but the real estate market can shift quickly.
Is 2021 your moment to sell?
Real estate professionals seem to agree that in a changing economy with unpredictable variables, the time to get top dollar for your property is now. For all the factors mentioned here, as well as many others, 2021 is one of the best times over the past decade to sell a house — an unusual opportunity that won’t last forever. And getting a great deal on the sale of your home could open the door to an exciting new future. Ventana by Buckner offers a gorgeous high-rise residence that complements fabulous lifestyle amenities with impeccable safety standards and the assurance of Life Care. High-rise life at Ventana means enjoying complimentary hospitality services and a maintenance-free lifestyle, along with a full complement of recreational, cultural, culinary, social, spiritual and wellness opportunities. Residents enjoy a beautiful indoor pool, salon and spa; a movie theater; fitness and wellness center; three exceptional dining venues; and a stylish 12th-floor Sky Lounge. Request your free downsizing guide for help getting started. The Ventana team is ready with information and guidance. Contact us to schedule a personal appointment or tour here.