With a new year fast approaching, those with interest in the housing market always wonder what the future months will bring. Though real estate is a somewhat unpredictable industry, there are certain trends that may be observed and predictions to be made based on the performance of the previous year. We decided to get Alan’s take on what he thinks the market conditions will be along the Crystal Coast coming into 2020.
2019 – It has been a seller’s market (2020 has proven this to be true. We are in the first half of the year and already the demand is getting higher.)
1. It will be a seller’s market
With the housing market having steadily recovered since the crash a decade ago, we are finally reaching a point where sellers may again have a slight upper hand. With lower amounts of popular properties available, sellers will be able to have their price demands and contract conditions met. This isn’t to say that sellers will be able to drive up prices astronomically and have buyers beating down their doors, but rather they will be able to list a property more confidently. Those putting their homes on the market will know that the likelihood they will be able to get what they’re asking for the home has increased significantly over the past couple of years and that there are more ready, willing and able buyers out there looking than have been in years past.
2019 – Yes…inventory has started to decrease.
2. Inventory will be low
One thing we’re seeing in our area in particular is a low inventory of available properties. There are qualified buyers looking to purchase vacation homes or relocate permanently to the area but the types of homes they want in the locations they desire simply are not for sale. Low inventory always drives the market in a seller’s favor – if Tom Smith who owns a waterfront home in one of the most popular neighborhoods in the area puts it up for sale, he is likely to be inundated with offers the second the listing hits the MLS. Low inventory also contributes to a seller’s market in that it forces buyers to broaden their criteria. They may have to go with a smaller home than initially desired or be a bit further away from the water in order to find something in this area. If you are selling a fantastic house on the island but don’t have that coveted water view, the area’s low inventory may be in your favor for these reasons.
2019 – Prices are increasing.
3. Prices will increase
According to the law of supply and demand, when the supply is low the demand (and thus the prices) will be higher. This is perhaps truer nowhere else than the real estate market. When there are few of these luxury waterfront homes for sale, the prices are going to increase and whoever is willing and able to pay them is going to end up having their offer accepted – to the victor goes the spoils, right? However, this isn’t going to only apply to luxury beach front property but rather should be a trend we see everywhere across the area. As the economy continues to recover, unemployment decreases and more people are able to consider buying vs. renting, the market will be flooded with people looking to purchase homes. When this happens, all types of neighborhoods in the area will see a jump in price because the demand will increase quickly and steadily while the supply will remain the same or increase at a much slower rate – say, the time it takes to build some houses. If you have been considering putting your house on the market, 2020 may be the time to do it.
2019 – Yes….we have seen this also….
4. There will be multiple offers on a higher percentage of available properties
Again we go back to the law of supply and demand and the low inventory – with all of these factors working together, there will surely be many people vying for the same properties. This translates to multiple offers being placed on properties at the same time. This of course is a huge advantage to the seller as they get to see just what each party is willing to pay, concede, do as far as dates are concerned, etc., to ultimately have the home they desire. While there are rules for agents regarding how offers must be disclosed to sellers, the order in which they must be presented, information that can be disclosed between agents in certain circumstances, ultimately the seller does have the upper hand here. He can counter these offers as reasonably or unreasonably as he likes. When in a multiple offer scenario, the serious buyer must be flexible and ready to make quick decisions or they risk losing out to another party who has also placed an offer on the table.
2020 – Don’t think we are at this point….yet…
5. Buyers will be offering higher than listed prices
With low inventory and multiple offers becoming prominent market factors, buyers who are able will likely be willing to offer above the listing price to secure their dream home. This doesn’t necessarily mean they will be offering an exorbitantly higher amount, but perhaps just enough to make the seller feel comfortable that he’s gotten the best deal for himself and is ready to head to the closing table. Buyers don’t necessarily have to be in a multiple offer situation to offer more than the listed price. Perhaps they sense some hesitation on the sellers part about selling at all or feel that he is going to reject their offer in hopes of receiving a better one. If they are financially able and are wanting or needing to secure a properly quickly, they may do what’s needed to make their offer more attractive. In higher-end neighborhoods with few homes available, buyers will likely jump on the homes that do come on the market and try to get to the front of the line by starting with a higher than listed offer in hopes of getting that property back off the market as quickly as possible.
No matter if you plan to be on the buying or selling side of things in the upcoming year, these predictions certainly point to a busy 2020 for everyone in the real estate industry and market alike. Sellers will be able to list confidently for the first time in several years and people who have been unable to buy due to financial situations are increasingly being able to become first time homeowners.