Hazel Emlen is a member of the California.com Recommended Business Program, which highlights only the best businesses in the Golden State. To be featured, each business must be highly regarded, have a unique California story, and make a positive impact in their community.
One of the things that many people are wanting to know is, How is our real estate market doing right now? If you were to ask really any REALTOR® across the country this question, I bet their answer would be very similar to mine. There are just not enough homes for sale in the market to meet the extreme demand. Whether you are in a big metropolitan area like Austin, Texas, or in a smaller area like my county of Solano, the sentiments on the real estate market are the same! In short, low supply and extreme demand. This makes for a seller’s market 100%!
Why is it a Sellers Market Right Now?
So, what is happening? The strong demand that we are seeing out there is driven by several factors, but here are the most common reasons I am currently seeing for why it’s a seller’s market.
1. Historically low interest rates
The interest rates are still incredibly low which is encouraging new and repeat buyers to take advantage of this market. Just a couple years ago our rates were, in some cases, above 5%. These rates were historically low back then, but now you see 2-3% rates and it looks like a steal!
Who wouldn't want to take advantage of a market with that kind of rate? You could save thousands by investing now and buying in a seller’s market instead of waiting! This is a major reason why so many people are flooding the market to purchase. They want that low rate for potentially the next 30 years!
There is no question that the COVID-19 pandemic is another strong force driving the insane demand that this market is currently experiencing. With many people now working from home either indefinitely or, in some cases, permanently, many are finding the need to set up an in-home office! In addition, with many kids still doing remote schooling, families are finding that their current spaces are cramped. Their current homes are no longer able to accommodate their families! We are seeing many families upgrading their spaces to larger homes that offer the space they now need.
3. Migration to suburban areas
In the North Bay area where I am located, we are about 45 minutes to San Francisco and just a little over an hour from the Silicon Valley. We are experiencing a large number of people choosing to move towards our more suburban area from places like the Bay Area and Silicon Valley. With the realities of the world we’re in, many people just do not want to pay the high price of living in a big city such as San Francisco!
With many tech companies now having their employees work remotely, there is really less reason for many of those families and individuals to live in those bigger cities. Plus, people just want more space! And many are no longer looking to commute or use public transportation in light of COVID-19.
Prior to the pandemic, droves of people were heading to the city so they wouldn’t have to commute to work! I remember hearing about owners renting out tents in their backyard because the demand for cheaper housing in those areas was so high and so hard to find! But those areas come with bigger price tags! With the ability to work wherever someone wants, many are now seeing the value of buying a property with a larger home and more lot space for a fraction of the cost!
Buying a House In a Seller's Market
So, what does all of this mean? Well in short, the extreme demand in our market is making it tougher for buyers. With the increased demand and lack of supply, it is a very competitive time in our market. We are seeing multiple offers on any one home with very competitive terms!
Many times, buyers are having to remove contingencies, come in with appraisal guarantees, and even offer well over the listed price. Buyers should know that in this market, it is vital to have their ducks in a row. They should have a pre-approval ready to go! Now, more than ever, timing is everything. But it can be a great time to get into the market!
How Does a Seller's Market Affect Real Estate Listings?
For sellers, there has not been a better time to sell! These offers that are coming in are very competitive! In some cases I have seen $50k-$100k over the asking price, with all contingencies removed! People are willing to pay a high premium to secure a home. If you have thought about selling, it’s certainly time to take advantage while the market is hot!
In closing, our current housing market is still going strong with many factors playing into the high demand. This market continues to be a seller's market and will most likely remain that way for some time. It will be interesting to see where we’re at come the end of 2021. For now, all indications show a healthier 2021 all around.
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