“Right sizing” home purchasing emerged as a market segment in the fourth quarter. Many opted to downsize to a smaller, more manageable living space, while others upsized and gained features, such as a home office and upgraded kitchen, that fit into a new stay-at-home lifestyle brought on by the pandemic.
Low interest rates enticed buyers to seek houses that fit their new needs, but a shortage of inventory created an atmosphere of fierce competition. Buyers didn’t just compete with people within their community, but with the new segment of telecommuting urban dwellers seeking more space, affordability and opportunities not tied to their employer’s location.
According to the National Association of REALTORS®, existing home sales in 2020 surged to the highest level it’s been in 14 years – 22% higher than a year ago. Locally, and across the nation, there just wasn’t enough inventory to match the number of active buyers. And while new construction has picked up markedly, it likely won’t be able to keep pace with the increased buyer activity.
Sellers benefited from this as home prices rose in the midst of multiple offers often above the seller’s list price. Entry-level priced homes already in scarce supply sold quickly —a trend that is expected to continue in the new year.
Experts theorize that more homes may go up for sale as home prices continue to rise and vaccines become more widely available. This could entice additional owners to sell, potentially partially offsetting the lack of inventory we saw last year.
This could be good news for buyers concerned that they will not be able to find a home due to amplified competition. Interest rates are likely to have bottomed out and may gradually increase in 2021, but still remain historically low, making these next few months a prime time to begin the home search.
The bottom line is that a well-priced home will continue to sell quickly in our local market. Sellers should consider taking advantage of high demand and scarce supply, and buyers should have the finances in order and be willing to compete aggressively in this robust market.