May 13, 2021
The 2021 Housing Market: Expert Tips for Buying & Selling
Just like many other things in the world, the housing market has been significantly affected by the onset of COVID-19. The uncertainty that came along with the pandemic meant people were less likely to put their homes on the market, and a drop in mortgage rates encouraged more buyers to start their home search in 2020. As a result, 20% of first-time buyers have already spent more than a year shopping for a home. Needless to say, we’re undoubtedly in a seller’s market today and for the foreseeable future.
So, what exactly is a seller’s market?
In a seller’s market, less than six *months’ supply of homes is available, which means sellers can make more demands of buyers and are ultimately controlling the market. On the other hand, a buyer’s market indicates that more than six months’ inventory is available. This means buyers can be more selective and write lower offers without the looming worry of their dream home getting picked up by someone else.
This past January the housing inventory hit a record-setting low of just 1.04 months’ supply of homes, a 25.71% decrease from January 2020. Additionally, realtor.com is estimating the number of homes for sale plummeted a whopping 49% this February compared with last. If that estimate is correct, there were less than 0.75 months’ supply of homes in the U.S. market as of February 2021.
*Months’ supply/inventory refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.
What does this mean for buyers?
At first glance, it may seem that now is a terrible time for buyers to enter the market, but that’s not necessarily true. Mortgage rates are allowing buyers to stretch their budget for a home that may have been out of their price range previously. Interest rates in the U.S. hit a record low this past January, with an average of 2.65% for a 30-year fixed loan. While rates have increased slightly since then, major industry players think interest rates will likely stay below 4% through 2021.
We sat down with Shawn Kriewaldt, leader of the Madison Neighborhoods Team at Keller Williams Realty, who has 20+ years of home buying and selling experience under his belt. The seasoned broker associate and REALTOR® talked us through his top five tips on how homebuyers can land their dream home in 2021:
- Make sure your financial ducks are in a row. If possible, have your pre-approval ready and underwritten. There’s nothing a seller likes more than knowing upfront that you are financially ready to buy their home.
- Hire a REALTOR®. While many people think they’ll save money by looking on their own, an agent’s expertise can end up saving you more money and time in the long run by helping you understand the current market, negotiate the best offer terms, and more.
- When writing your offer, don’t focus on price alone; other terms can be just as important to sellers. You may want to waive certain contingencies or add an escalation clause—this automatically increases your offer price if higher, competing offers come in.
- If possible, structure your offer as a cash offer. The seller can sleep well knowing your financing won’t fall through and ruin the deal.
- If you find your offer and terms are equal in comparison to other offers, write a personalized cover letter. Considering this home is likely where many of their most heartfelt and loving memories were created, a letter that tugs at their heartstrings is a great way to move your offer to the top of the pile.
How should sellers prepare?
Just because the market favors sellers right now, that doesn’t mean sellers shouldn’t also adequately prepare themselves. If you’ve decided to take advantage of this “hot” market and list your home for sale, here are a few of Shawn’s suggestions.
Price your home correctly.
The best way to do this is to make sure you have an experienced real estate agent who is familiar with your community. Shawn says, “Despite the hot market we’re currently in, overpricing your home will cause it to sit, so it’s important to get the price right or you will end up selling for less. A good real estate agent—one who will negotiate the best terms, has the best strategy to stage, professionally photograph, and digitally market your home, and put in the research to give you the most accurate list price—is worth every penny.” If you’re selling in Dane County, Wisconsin, reach out to Shawn; he would be happy to help.
Stage your home.
By making your home attractive and presentable, you’re helping your potential buyer envision their future there. A few places to start are decluttering your home, adding brighter bulbs or new lighting fixtures, and eliminating personal items.
Don’t accept an offer based on price alone.
Make sure to look at the contingencies buyers add into their offer, because depending on their terms, a seemingly lower-priced offer may end up netting you more money in the long run.
Ultimately, the current housing market can be beneficial to both home buyers and sellers. While predictions indicate that the market will stay this way for a while, if you’re considering either buying or selling a home in the near future, it’s not a bad idea to start your research now.
If you’re looking to buy a home, it may be worthwhile for you to check out our Bi-Weekly Benefit Plan. This plan partners with a BetterLife Universal Life Insurance policy and drafts your account for half of the amount of your mortgage every two weeks to make your monthly mortgage payment for you. By paying every other week instead of once a month, you make two additional half-payments each year, which are then used to help fund your Universal Life policy!
Sources: Data in this article was pulled from the National Association of REALTORS®, realtor.com, time.com, and danecountymarket.com