Market Update – High Demand vs Low InventoryHolly Young2021-03-05T11:05:33-08:00
Demand Continues To Drive Housing Market
The title says it all. As we have opened up to 2021, now heading into the finish of our 1st quarter, the housing market is superseding levels seen in 2020. The biggest driver is the demand for housing. Period.
What is currently happening in our housing market is that the demand for housing is far greater than the inventory we have. More buyers than homes available. If you couple this with the levels of income rising, the stock market continually elevating, i.e., GameStop and inflationary aspects still keeping at bay, this economy is thriving and the housing market is reflecting this.
What is more indicative is the areas that are being overbid, which is perpetuated by 1) location 2) no inventory. Not every home on the market experiences this, but more do than not.
Recently here in Bennett Valley, I have watched this market jump up $156,000 with a most recent close in a neighborhood that reigns typically in the high $600,000’s with a recent close on a track home at $831,000, shocking most of the neighborhood. But again, without inventory to choose from and the desire of buyers to move coupled with cash they may have, these prices continue to go up.
Why The Housing Market Will Thrive In 2021
After over 30 years in this industry I have never seen a market move the way this one does. But when you break it down, there are very factual reasons why this economy and market is doing so well, despite 2020. First, there are many businesses thriving as well as the income people are earning. You have more people individually investing into the stock market and winning. Many industries are thriving and growing BECAUSE of 2020. It all depends on where you look and your perspective.
If you couple that with the continued low interest rates and people making bolder decisions, not putting off things until later, it’s easy to see why this housing market is doing so well. Many people have the means, the money and the desire.
This is not to downplay the impact that 2020 has had on many individuals and businesses that have suffered losses. There are many out there that have. But the ratio of negative to positive swings much heavier on the positive side. Many businesses are reporting higher than usual earnings, mostly from the shift in what we were allowed to do this past year. One thing is for sure, 2020 has changed the game.
The housing prices are predicted to go up 8% in 2021
Is This Market Sustainable?
The question of sustainability is really up to many factors, which would have to change to slow this down. We would have to have a significant rise in interest rates, and inflation would have to kick in. These both correlate with one another. I know many have been waiting for a housing correction, going back to 2018 when some large portfolios of real estate were being sold out of fear of a correction, which didn’t happen.
While there are many experts out there on the economy, it is very difficult for anyone to predict how this market will move. Period.
My belief is that we are in a different era of the way the economy works and the place we are now in. We have been highly seasoned due to previous experiences in the past, so the financial hedging is not at the levels it was in 2008. We are playing this game different, which could very well may be the reason this market will sustain for quite a while, coupled with the fact we are far more resilient than ever before .
If you have thoughts about selling, this is your opportunity…now.
As always, should you have any questions, please call me at (707) 477-9885