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What is going on with home values?! Many areas in the United States are experiencing significant run-ups in home values…..
Housing has been hot for several years now. And yet a pandemic has somehow been a part of accelerating this trend even further!
One would think the pandemic consequences of increased unemployment and a slumping economy would also negatively impact housing. Generally, unemployment adds to inventory as people mull downsizing, or leaving more expensive areas to head for more affordable housing markets.
However, several factors have created the opposite effect.
First, housing is largely impacted by interest rates, which is why one of the government’s first responses to COVID was to make several stimulus moves to help drop rates. Lower rates equate to lower payments, which increases affordability.
Next, the pandemic has created a significant demand/supply imbalance. Low rates and cooped up buyers have fired up demand. Fears of COVID has sellers less willing to open their houses to would-be buyers. Sellers are choosing to hold off listing their homes. Some are staying put, refinancing to lower payments or cashing out equity for home upgrades to improve their current living situation. This imbalance has created bidding wars on homes as the number of buyers far outweighs the number of available homes.
It will be interesting to see what happens when sellers hit the market once they are more comfortable opening up their homes. We may see a significant number of people decide to cash-in and move elsewhere to more affordable areas. Rates ticking up will also create pressure on housing. Yes, rates will head higher at some point. The government can only keep rates artificially low for so long before inflation takes hold, putting an upward pressure on rates.
So, is now a good time to sell? A good time to buy?
Our advice remains as it always has...you should buy and sell when the timing is right for you and your family based on your current life and financial situation. You will always be fine if you make prudent decisions based on a longer time horizon. Short-term speculation and market timing rarely pay off.
So, if the timing isn't right for your finances, don't buy out of fear you'll miss out because prices could get out of range. Don't sell out of fear prices could drop and leave you with less selling proceeds.
We recommend making sound decisions based on facts and strategic planning, rather than fear and emotions!