Recent closed home sales have housing market indicators flashing full speed ahead, so what could cause that train to slow? One of the best ways to judge a market is supply and demand, and yet supply is the one thing that may hold this market back.
Housing Market Indicators Flashing
As you can see from the homes closed graph, 2020 home sales are outpacing the previous four years. The thing is, the previous four years were good years in real estate, so 2020 is shaping up to be a phenomenal year.
What may limit a record number of home sales in 2021 could be supply. If we do not see more listings entering the market the SW Florida real estate market will simply run out of fuel. We believe however that more sellers will decide to list their home in 2021 than 2020, for a few reasons.
More Listings Coming?
The first reason is profit taking. Home prices are up 18.8% over last year for October. That is an unbelievable month over month price gain. Each year sellers assess their situation. One trend we are seeing are rental homes suddenly becoming available. Typically, the landlords have not raised their tenants rent like other landlords because they have had years long tenants. Sometimes it is hard to raise the rent on longtime tenants, to the next easiest thing to do is sell the property. Either way the tenant ends up moving unless a new buyer wants to keep a tenant.
The second reason we may see more homes on the market in 2021 is covid-19 relief. Many sellers did not want people in their home in the middle of a pandemic. As therapeutics and vaccines are released, this may change. Whoever thought herd immunity is a term we would use in real estate or any other faction of society?
As we approach herd immunity, more people will be comfortable returning to a normal life and buying and selling real estate is a part of that return. Some people put off their life plans for a whole year. This may add to pent-up supply hitting the market in 2021.
Interest rates are low and should remain low for the balance of 2021. We may have enough housing supply to get us through a few more months. Last month we had 1,593 new listing come on the market, while 1,770 went pending. We have a little over 2 months supply of inventory which is as low as we have ever seen it.
We believe we will see more listings enter the market in January, but who knows for sure. Once Covid numbers abate and as the vaccine is released, we think more people will be comfortable placing homes on the market.
Sellers Looking for Top Dollar?
Sellers wishing to sell for top dollar may want to call us before other sellers enter the market. Supply is limited and demand is high. We have buyers coming here from out of state markets where their business and life is restricted. We know how to market to these buyers and achieve top dollar for our sellers.
Nobody can time the market perfectly. If we could venture a guess, selling before May 2021 may be a great idea. Many experts are predicting herd immunity by May. If our theory is correct about sellers holding off for Covid reasons, this timeline makes sense for maximum leverage. Of course, economic factors will be in play, a new administration taking office, new tax policies, etc. Many things can affect the real estate market and the economy.
The bottom line is right now is a great time for home sellers. We think it should last awhile as interest rates are expected to be low through 2021. As usual, we will keep watching housing market indicators for you.
To find out your home’s value go to www.SWFLhomevalues.com or call Brett or Sande Ellis 239-489-4042 Ext 4.
Good luck and Happy Home Shopping!