2020 has been a year that we most likely won’t forget. I compare it to looking both ways before crossing a street, and then when crossing getting hit by an airplane. It has been a year of many surprises in real estate. The biggest challenge this year has been the shortage of houses for sale. To give you an example, 10 years ago there were over 1000 houses for sale in Pike Township. Today there are about 60. Why?
* Interest rates are at historical lows. About 3 % currently. (See next)
* Refinancing a home that you bought 10 years ago and paid $150,000 for with a mortgage rate of 6 % if refinanced today could save you upwards of $250 a month in mortgage payments. An incentive to stay where you are.
* Average prices in Pike have gone from $123,000 (2010) to $206,000 (in the past 180 days). Homeowners are now treating their homes as investments.
* People of all generations are staying put because of economic uncertainty.
* Because of COVID and many having to work from their homes, owners are updating their abodes instead of selling, keeping Lowes and Home Depot in business.
* Buyers will pay a premium for a brand-new home. Unfortunately, production builders do not like to build starter homes. They can’t make any money. They prefer homes in the 300 to 400K range.
My experiences this year;
* Sold an average priced home in Crooked Creek Heights in 8 days with 23 showings and 5 offers.
* Sold a lower-priced condo for $5,000 over list price in 10 days.
* Sold an investor 4 condos in one sale. This is unusual. I just happened to know an investor buyer and an investor seller and put them together.
A key indicator that tells whether it is a buyer’s or seller’s market is the absorption rate. Basically, the rate at which available homes are sold in a specific market during a given time period. The absorption rate in Pike right now is about ½ of 1%. Anything under 6 is a seller’s market. Currently, sellers will dictate pricing and contingencies.