No matter where you are in the country, you’ve likely heard from at least one person who has tried selling their house lately and been stunned. The market is so hot even for homes in comparatively less popular areas that many people are able to sell very quickly and at high prices.
Most people like the idea of getting a good price from their current home, but since so many people buy a different home after that, they have to deal with how this sword cuts both ways. Homebuyers are running into the issues of a sellers market: not enough options, high prices for the options there are, and cutthroat competition to get a good offer submitted before the house is sold to someone else.
So how did we get here, and how did this sellers market stick around for so long? Here are some of the factors that have been contributing to our current market, according to the top real estate agents surveyed by Homelight.
What Got Us Here: A Pandemic and Low Interest Rates
Like so many big shifts in our economy, the seller’s market became apparent in the early months of the global COVID-19 pandemic. People suddenly needed to move for a variety of reasons, from needing space for working from home to wanting to get out of crowded urban centers where social distancing was difficult. Putting more buyers into the market than usual drove up demand for any given listing. Pair that with individual sellers worrying about how to social distance and still find a good buyer pool, and prices soared.
It didn’t help that interest rates dropped to very low levels, prompting many people who had considered moving to see this as the time to lock in a low rate.
What’s Holding the Sellers Market In Place: Hesitancy to Sell and New Construction Lags
While a sellers market can often go on for months, this one is going on a bit longer for a few reasons. Low inventory of available homes for sale is at the heart of the issue, since many people are still hesitant to sell, even if it is for different reasons, like the fact that they were able to refinance for a lower interest rate instead of moving.
Lumber shortages also created challenges for new home construction, and builders, like anyone else, want to be sure that someone will be willing to buy the homes they’re building. Even as building ramps up due to the low inventory of available homes, it takes time to build enough houses to move into a buyers market.
How We’ll Get Out: Still to Be Seen
If interest rates grow, there is a clear path to a buyers market, since fewer buyers will be motivated by higher interest rates. However, the rest of easing the sellers market is likely to happen as a combination of more sellers, more new construction, and more typical market forces as the United States grows accustomed to our lives with COVID-19 in the world. Even the best agents cannot predict exactly when these events will occur, though.
