The long and unscheduled days of summer are coming to a close and back-to-school season is gearing up! Hopefully, you fit in some traveling this summer, as well as time spent with family and friends catching up in a more comfortable atmosphere than what last summer allowed.
My team and I welcomed summer and its slower pace as we wrapped up the wildest spring market we have ever experienced. We sold more homes in the first six months of 2021, than total sales of either 2020 or 2019. Phew!
Let’s take a look back at the first part of the year and how the real estate market fared, and then we’ll look forward, to review what the fall market is projected to look like.
This past spring, the market experienced demand like we had never seen before. The spring market broke all records. Inventory at record lows, specifically down 50% YOY in Charlotte, interest rates hitting a historical low of 2.7%, and prices hitting all-time highs coupled with buyers paying over asking prices. Builders experienced the challenges of supply shortages and skyrocketing material costs, but consumers continued to move forward with their builds. And so the question started getting asked, are we in a bubble? The answer is no, we are still simply in a housing shortage. Charlotte’s Axios surveyed many local realtors, including myself, and the answer was consistent. [Missed the Axios article? Check it out here.]
For the last fifteen years, the U.S. has been underproducing inventory. As builders continue to press forward, those new home buyers will release older homes into the market, making up about 10-15% of the resale inventory. Next year we will exceed the historical average of inventory in the U.S., but it is still a shortfall to make up for the lack of inventory in the last decade plus.
You may hear news reports of sales teetering off, but it’s not due to lack of demand; it’s due to lack of inventory. You may also hear that mortgage applications are down, but this is a result of more cash deals. Buyers are using cash to be competitive and beat out other buyers who need financing. Secondly, the stock market hit an all-time high this spring, so we are seeing buyers leverage those funds.
Housing prices are on very solid ground.
The starter home market is extremely challenging right now; the inventory is almost non-existent, and therefore the sales cannot occur. The million dollar plus market does offer inventory to buyers and those sales are moving right along.
There will be more inventory in the fall, but the challenge will be rising interest rates. They have already come up from 2.7% and with sales prices continuing to rise, affordability can be extremely challenging for buyers. Sales are expected to be less than in Spring 2021 and also less than Fall 2020 (which is not surprising, given the delayed demand the pandemic contributed to through Spring 2020).
We are so grateful to all of you–our family, friends, neighbors, and clients–for your continued support of our business. We were able to help so many of you into new homes, whether on your radar prior to the pandemic, or the pandemic driving a new need for space. We realize our industry is one of few that has benefitted from so many changes we have all had to endure over the last 18 months. We are always happy to answer any of your real estate questions, you know how to find us!