Although the Covid-19 global pandemic has plunged many countries, including the United States, into a recession, there has been an unexpected boom in the housing market.
Experts estimate that between September 2019 and September 2020, homeowners accumulated a collective additional $1 trillion in home equity. With the supply of available homes historically low and unprecedented demand, property prices have been pushed up far beyond expected. In some areas, it’s been impossible to buy a home without entering into a full-scale bidding war.
While the housing boom has been excellent news for homeowners, it’s been less than positive for buyers, many of whom have found themselves locked out of the housing market or paying much more for a property than they would have done in pre-pandemic times.
Plummeting mortgage rates have meant that the cost of borrowing to buy a property is much lower than previous – with mortgage rates reaching a record low of 2.65% in early 2021. With buyers keen to take advantage of these low interest rates, demand for homes has surged.
Unfortunately, fewer houses mean that prospective buyers inevitably end up bidding up prices. This is great news if you are selling as it means that if your home is in a high-demand area, you could end up getting much more for your property than previously anticipated. And the extra that you get for your home can be extremely helpful when it comes to securing the property that you plan to move to – especially if prices have been pushed up there too.
If you are selling your home and you live in an area with low supply and high demand, chances are you will be inundated with offers fairly quickly. It can be really helpful to hire a great realtor to help with this step of the process as they can handle bids on your behalf and help you to decide which buyer you want to sell to. This decision is important because you shouldn’t base it solely on the highest offer. Your realtor will help you decide which buyer is in the best position in terms of whether they are a cash buyer or they have a homeowner mortgage in place, how quickly they can act and any other elements that could affect their attractiveness as buyers.
If you are planning on buying a home, you may be up against some stiff competition and so it can be helpful for you to get yourself in the best financial position possible to make yourself a more attractive prospect to sellers. This means having a solid deposit in place and a letter to prove that you’ve been accepted for a homeowner loan. When it comes to making an offer, a realtor can help you to identify where to draw the line in the bidding process. It can be very easy to get caught up in the process and let your heart rule your head, but this can lead to you paying way over the odds compared to the value of a property. Your realtor can help keep you grounded, and present you in the best possible light to sellers.
It’s not unusual for buyers to want to negotiate over some of the smaller elements of the sale – such as leaving fixtures and fittings behind or asking the owner to make a few minor repairs before you complete the purchase. However, when demand’s high it’s not the time to haggle over the small stuff, and doing so could put you in a less favorable light than another buyer. Just make sure you factor in the costs of anything you might usually negotiate over when it comes to making your offer.
For more advice on buying and selling during the COVID housing boom, contact Altmann Ayala Realty Team at 858-216-2700 today.