I’ve been in the real estate industry for decades. First as a Realtor for twenty years where I also did new construction sales and was a partner in a home building company. Then I went on to open my home staging company in 2007. My experience tells me that whether you want to upsize or downsize your home or simply want to move to a new location, doing so in 2021 can make financial sense, and now is a good time to make the move. The three main reasons are money is cheap, prices are up, and the “COVID factor” has played its part in the market.
Getting a mortgage is pretty cheap
Ever since the “Great Recession” of 2008, interest rates have been pretty low. According to the Mortgage Bankers Association, mortgage rates in 2021 are expected to remain as low as 3.3% and up to 3.6% for the average 30-year loan. Fannie Mae expects it to be even lower at 2.9%. In real terms, that means a $250,000 30-year mortgage is only about $1000 a month. That’s cheaper than renting a half-decent 2-bedroom apartment. So, if you’re looking to buy your first home or buy a new home, now is the time. You will not find rates much lower than 3%, and you never know when they may go up. Which they just might do by year’s end.
The downside of the low-interest rates is that more people can afford homes and have been buying them quickly which drives prices up. This increase in demand for homes has caused the availability to go down, so the housing inventory is low.
Prices are up. Isn’t that a bad thing?
No not really, the prices of homes may fluctuate but over time they historically always go up. If you’re a first-time buyer, by waiting a few years you could find prices go down some but only if the supply of homes increases, and if you need a mortgage, the rates might be higher meaning it will cost you more. Remember, mortgage rates are mostly based by the economy and not necessarily the housing market supply. That said, the Mortgage Bankers Association is projecting a slower but continued rise in home prices of about 2.4% in 2021. If you are looking to sell your home and buy a new one, now is the time to sell while supply is low, and prices are up. But let’s consider the COVID factor.
COVID has made the housing market an opportunity
2020 was a challenging year for just about everyone. People decided to wait and see how the pandemic played out before selling or buying a home. Additionally, because of the pandemic, new home construction stalled or slowed down for most of the year. This has caused home inventory to shrink even more and in turn, prices to rise. But COVID has affected more than just the housing market. It has slowed the economy as a whole which has kept interest rates low.
As we start to see COVID vaccinations roll out and an apparent “light at the end of the tunnel” more people are ready to move forward with their plans to sell. Additionally, new home construction fired back up during the latter half of 2020. Both of these factors will sharply increase housing inventory in 2021 and will temporarily slow or stunt home price increases. But there is no indication the overall economy will improve that quickly and lower interest rates will probably still be in place.
The bottom line is that the “Covid Factor” means there is a window of opportunity to buy a new home with amazingly low mortgage interest rates. If you are looking to buy your first home, waiting a few months may possibly get you more homes to select from. If you are planning to move to a new home and sell your current one, get your house ready to sell and on the market now- before the coming increase in home inventory.
Maximize profits on your home sale
Remember selling your home is a business transaction and not an emotional one. So, think of it that way- with your home as a commodity. For the buyer, it is much more of an emotional venture. Buyers want to move into a home and prefer not to have to do anything for generally five years. They want to walk in and fall in love with their new home! If your home needs work or if it’s hard for buyers to visualize themselves living in it, which can be true for newly constructed or vacant properties, they’ll just say “next” to the Realtor or offer you less than it would have cost for you to fix it yourself.
In fact, I discovered through my many years in reality and in doing renovations, if you make your home look great, accentuate all the great features, and design and stage it the right way, you will get instant offers from buyers and possibly be in a multiple offer situation. They will typically make their offers fast, and at your asking price, or above, even if your home is listed on the high side.
This is why I moved my focus to home staging. I love helping and seeing people sell their home for thousands more than they thought they could get because of home staging and sell it quickly! You will spend money on having your home professionally staged, but it’s really a short-term investment. It has been proven over and over again that the cost of home staging will generate a return of 3% to 30%. Best of all, with a professionally staged home you can set your asking price higher and it generally sells faster. The premise is simple: “increase desire and the value goes up!”
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