Real Estate
By Jennifer Herron-Underwood
If you have lived in Northeast Ohio in the past two years, you may have noticed an interesting phenomenon… a For Sale sign goes up in someone’s front yard and in less than a week, the sign says Sale Pending.
Yes, that home and many others are under contract that fast. Curious, you may look up the house on Zillow or another real estate site, or check your local newspaper to see what it sold for. The sale price was above the asking price? Really? It must be a mistake, you think.
It isn’t. What’s going on with real estate? Why are houses selling so fast and for more than their asking price? And what does that mean for the 2021 real estate market?
Hot Market
Interest rates are at an all-time low. They have been ridiculously low for the past year and economists are not expecting them to increase anytime soon. Low interest rates have brought buyers into the real estate market, some of them first-time buyers.
In addition, many are homebuyers who realize that rising home values in the past decade have created a lot of equity in their own homes. They’re taking advantage of the low interest rates and the equity to buy their “forever home.”
According to Northeast Ohio’s multiple listing service for real estate agents, there were 46% fewer homes for sale in 2020 than there were in 2019. That translates to only 6,351 homes for sale through December 20, 2020 compared to 11,834 the year before. When you combine the lack of houses for sale with the incredible interest rates, you get a fast-paced, aggressive seller’s real estate market.
Another way to look at the real estate market is through a statistic called the months of housing inventory. The months of housing inventory is the number of homes for sale versus the number of houses selling.
In a seller’s market, there is typically 0-3 months of housing inventory. In a balanced market, there are four to six months of housing inventory. A buyer’s market means there are six or more months of housing inventory available.
In 2010, when the housing market was at its worst in Northeast Ohio, the real estate industry had 20-33 months of housing inventory available. In 2020, the months of housing inventory has averaged 1.4 months, meaning it is a strong seller’s market, which gives the homeowner an advantage.
The combination of a strong seller’s market, the lack of available homes and low interest rates creates a perfect situation for home sellers today to not only sell their homes for close to asking price, but in many cases, to also get more than their asking price.
Buyers are getting into bidding wars. In some markets, homes sell for $10,000-$30,000 above the asking price. If you are thinking about selling, now is a great time to capitalize on the market. You can also talk with a real estate agent about ways to protect yourself so you have enough time to complete your downsize (or right size) and still get your home sold fast in 2021.
Jennifer Herron-Underwood is a real estate agent and a Senior Real Estate specialist. She can be reached at [email protected] or 440-371-2862
