2021 Housing Market – January
If you have talked to anyone trying to buy a house in Northern VA recently, you may have heard that it seems impossible. Homes are selling within hours and buyers are having to take extreme measures to have their offer accepted, short of offering their first born.
Many homes are receiving dozens of offers and the purchasers are bidding anywhere from $5,000 – $100,000 over the asking price. In addition, a new trend that we are seeing are ‘Sight-Unseen’ offers. People are so desperate to buy a house that they send in an offer without even stepping foot into the property in hopes of not having to compete with other offers.
When there is so much competition, buyers are opting to waive the home inspection, appraisal and finance contingencies. Which means, they can’t do a home inspection and they may have to bring extra cash to the closing table if the home does not appraise for the contract price. Which, in many cases is very likely do to these inflated prices.
I know that this sounds very discouraging, however it is better to know this and have realistic expectations, than to dive head first into a home search only to be sucker punched in the gut with your first offer.
What Is Causing The Chaos?
- The pandemic has taken our already low inventory market to even lower numbers. Many homeowners have put their moving plans on hold until it is safe to have people inside their homes and it is safe to travel elsewhere.
- Interest rates have been amazingly low and this gives buyers more options and buying power. First time buyers who thought they couldn’t afford to own a home, now can, and current home owners can now afford their move-up home or an investment property.
- New construction homes are not keeping up with demand either. Construction has been delayed due to supply shortages and there are waiting lists for new communities that are in the planning stages.
- The winter market is always low on inventory because most sellers wait until March, April or May to list.
When Will This Change?
As agents, we are all hoping that once the pandemic has less of an impact on our every day living, it will help things get back to a more normal pace. We also think in the short term, some buyers will just wait this out until it calms down a bit. Also, if interest rates start to increase, this may reduce the number of buyers looking to purchase. However, I don’t foresee interest rates rising any time soon, and if they do, it won’t be drastic.
I have recommended to my buyer clients that don’t HAVE to move to wait a little bit. I know that interest rates are really good right now, but will that really matter if you overpay on a house by $50,000 or more? I don’t want my clients to overpay for a house and then be underwater for the first few years they own it. We are still going to go look at homes and will stay very connected with what is happening. but now they have the expectation that their dream home may be a few more months away than they hoped. But I always, say, everything happens for a reason.
However, if that dream home does come along, and you know you will be there for at least seven years or more, than it might be something to consider. Be sure to take in all of the facts and make this decision based on logic and your long-term goals so that emotions and the act of competing don’t cloud your judgement.
Please reach out if you ever have questions about how the current market could effect your future plans. I am always happy to help!