![It’s Still a Sellers’ Market [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2021/09/22165444/20210924-MEM-1046x2173.png)
Some Highlights
- Due to low supply and high demand, today is one of the strongest seller’s markets we’ve seen.
- Sellers can benefit from more offers to pick from, higher home values, and a faster sales process. That might be why 73% of people believe it’s a good time to sell in seller’s markets.
- Sellers, don’t miss out on this unique opportunity. Let’s connect so you can take advantage of this hot sellers’ market.
What is a Seller’s Market?
A seller’s market occurs when demand exceeds supply, or there are more buyers seeking to purchase homes than there are available homes on the market. This often leads to multiple buyers interested in a single property, resulting in bidding wars. A seller’s market is a fantastic time to sell your home as you could secure a sale price that’s higher than your listing price, or at least more than your bottom line (the lowest price you’d be willing to accept for your home).If you’re buying a home in a seller’s market, be aware that the seller has the advantage. If other buyers are interested in the same property you’re making an offer on, trying to get a lower sale price probably won’t work to your advantage. In fact, you could lose the opportunity to purchase the property altogether if a competing buyer makes a higher offer. Seller’s markets are sometimes called “renter’s markets” for this reason; sometimes potential buyers need to keep renting until they can save up a higher down payment and compete with other buyers in the seller’s market.
Most cities across the United States experienced “seller’s market” real estate conditions during 2020, despite a pandemic and economic slowdown. And based on current housing trends, we expect this to continue for the foreseeable future.
Overall in a seller’s market, it’s still a seller’s real estate market in 2021. Anyone planning to buy a home in 2021 should be prepared for stiff competition due to the seller’s market. In a seller’s market, you can benefit your wealth if you take your time.
Tight supply conditions in a seller’s market and strong demand have made the housing market highly competitive and fast-paced. Quick sales and multiple offers are the norm for many in a seller’s market, if not most, U.S. cities.
It’s Still a Seller’s Market in 2021
Housing-related conditions can vary widely from one city to the next in a seller’s market. But overall, the U.S. is still in a seller’s real estate market.
It’s a supply-and-demand story, as always in a seller’s market.
Low mortgage rates and a pandemic-fueled desire for homeownership and space have increased demand within housing seller’s markets all across the country. At the same time in a seller’s market, real estate listings and overall inventory levels have declined sharply.
The end result in a seller’s market is a serious imbalance between supply and demand. In seller’s markets, there are lots of buyers actively seeking homes, but not enough properties to meet the demand. This has created a classic seller’s market in many U.S. cities, while boosting home values at the same time.
Fewer Homes for Sale Than a Year Ago
In February 2021, the national real estate brokerage Redfin reported that the number of active property listings in the U.S. had declined 40% from 2020 levels, reaching an all-time low. In other words, there are far fewer homes listed for sale today than a year ago.
A similar report from the research team at Realtor.com showed that the number of homes for sale in January 2021 was down by 42.6% year-over-year because of the seller’s market. That translates into 443,000 fewer homes listed for sale in January 2021, compared to a year earlier in the seller’s market.
That’s some serious “shrinkage.”
Properties Are Selling Fast (as You Would Imagine)
In a seller’s market, a national real estate report issued in February showed that homes are selling rapidly in many parts of the country.
This is another indication of a strong seller’s market. And it’s not at all surprising, when you consider the lopsided supply and demand conditions mentioned at the start of this article.
According to the February 2021 Redfin report, 43% of homes that went under contract in January 2021 had an accepted offer within one week of hitting the market. That was an increase from 30% a year earlier, marking an all-time high for this particular measurement.
A seller’s real estate market is usually brought on by low inventory and strong demand. And we have clearly checked those boxes. A number of industry reports have shown that home sales increased over the past year while inventory declined (at least in most parts of the country).
A Short ‘Survival Guide’ for Buyers
Buying a home in a seller’s market requires a particular set of skills, to borrow a phrase from Taken.
In a seller’s market, the most important thing is to understand what’s going on within your local real estate market. In a In a seller’s market, conditions can vary widely from one city or region of the country to the next. While much of the U.S. is experiencing a strong seller’s market right now, some cities and metro areas are a bit more balanced.
But regardless of where you live, according to a seller’s market it’s safe to assume that conditions favor sellers over buyers. That’s the current reality for most of the country.
So, what’s a home buyer to do in challenging times like these in a seller’s market? How do you navigate in a seller’s market, since it’s such a highly competitive real estate scene? How do you buy a house in a seller’s market?
Here are some tips and strategies to help you succeed in a seller’s market:
1. Make a strong first offer.
Thinking about low-balling the seller in a seller’s market, to score a good deal on a home purchase in a seller’s market you better think twice.
You might get away with that kind of tactic in a sluggish market instead of a seller’s market, where there are plenty of homes for sale but fewer buyers. But that’s the exact opposite of where we are right now, in early 2021 in a seller’s market.
In a seller’s real estate market, home buyers can benefit by putting a strong offer on paper — right from the start. Leverage your agent’s expertise in a seller’s market and knowledge of local market conditions. Look at recent home sales with an eye toward their sale prices. Figure out what similar homes are selling in the seller’s market for in the area where you want to buy, and base your offer on that.
Expand your search box.
Sure, you might want to live in that quaint little neighborhood that’s close to your work. But there’s always a chance you won’t find any homes for sale in the neighborhood that fall within your price range in a seller’s market.
And even if you do in a seller’s market, there might be dozens of other buyers lined up to purchase that same property. Such are the times.
The point is in a seller’s market, you have to be flexible and open-minded in terms of where you want to buy since it’s a seller’s market. While most of the country is in a seller’s market in 2021, housing competition can vary from one neighborhood or town to the next.
The same goes for inventory levels in a seller’s market. You might have a much easier time buying a home just by shifting one zip code away from your first-choice location.
3. Accept current market realities.
We tend to see a lot of all-cash offers in a seller’s real estate market. When demand begins to exceed supply in a seller’s market, many buyers and investors use all-cash offers to outfox the competition.
If you’re using a mortgage loan to buy a home in 2021, you have to accept this harsh reality in a seller’s market. There might come a time when you’re competing against one or more cash offers. And as they say, cash is king.
Be patient when you are in a seller’s market and persistent with your home search, but be realistic as well. The truth is, it’s a tough time to buy a home in many parts of the country in a seller’s market.
The intense and prolonged seller’s market has had a profound impact on Americans buying and selling homes this year due to the seller’s market. An incredibly low supply of available homes has persisted throughout the U.S. and historically low mortgage rates continue to encourage new potential buyers to enter the seller’s market – despite the competition. If homeowners thinking about selling their home, now is absolutely the time to do so.
Housing
Listings are still down, despite the seller’s market conditions that are incredibly favorable for selling a home.
Comparing year-to-date Bright MLS cumulative listings hitting the market in 2020 and 2021 (covering most of the mid-Atlantic region and the entirety of Houwzer’s Philadelphia, Baltimore and DC region footprint), both years started out on a fairly similar trajectory, but starting in February 2021, listings fell behind because of the seller’s market.
By early April 2021, though in a seller’s market, listings picked up pace and exceeded the year to date listings total of the same period the year before. This is not too surprising given in a seller’s market how much real estate activity fell off during the early days of the pandemic.
What is somewhat surprising is that 2021 so far has not seen significant listing gains compared to 2020, especially because seller’s market conditions to sell a home have never been better and this is in comparison to the worst periods of the pandemic shutdowns in a seller’s market.
It is somewhat shocking that more homes are barley coming to a seller’s market vs. what occurred during a (hopefully) once-in-a-lifetime pandemic, despite massive year-over-year increases in buyer demand and the pandemic winding to an end. It’s worth mentioning that this could be due in a seller’s market, in part, to the prolonged period at home and the shift to remote work in 2020. Many who planned to move this year might have already done so.
Home buyers and sellers can evaluate whether they’re in a buyer’s or seller’s market by analyzing a few key variables:
- Average days on market (DOM). This measurement shows the median age of real estate listings in your area due to the seller’s market. “If houses are selling in your neighborhood in less than 10 days, it’s a strong seller’s market,” Lejeune says. You can find what the average DOM is in your city using realtor.com’s Local Market Trends tool.
- Asking vs. final home price. In seller’s markets, bidding wars can often erupt among buyers, which means sellers may enjoy a final sales price that’s equal to their asking price, or more. So, if a home is listed at $450,000 and sells for $450,000, $460,000, or higher, that’s a seller’s market. In a strong seller’s market, the final sales price is typically at least 10% higher than the asking price. You can compare listing price vs. closing price in various cities across the country at realtor.com/local.
- Home prices over time. Rising home prices over time is a sure sign of a seller’s market. You can determine if home prices are rising or falling in your city by looking at your ZIP code’s “market price curve” on BuilderOnline.com.
