Here are some of the keys to making sense of our current market.
The market is incredibly resilient. I have 30 years of experience in real estate, and I must say that this is the most active I’ve seen the market—that includes 2007 when activity peaked. For homes under $350,000, it is still a seller’s market, but as you exceed $350,000, there’s a clear shift toward a buyer’s market. While the type of market you may experience depends on location and price point now more than ever, we’re still seeing plenty of multiple offers $10,000 to $30,000 above asking price. Why are people bidding homes up like this?
The answer: Interest rates are historically low. Now is a phenomenal time to lock in a 30-year mortgage. At the time of this recording, those rates were at 2.75%. If someone offers $10,000 above list price on a home, how much would you guess that alters their monthly payment? $80? $100? Nope—just $41 per month. So if someone is trying to secure a dream home for their family to spend the next 30 years in, paying $10,000 over asking price is reasonable.
If you own a home, it’s also a great time to refinance. Rates are slightly higher on the refinance side, but I have clients who took out 30-year mortgages just a few years ago and are refinancing to 15-year mortgages at 2.75%, and their payments are staying the same. That’s right—they’ve knocked five or 10 years off of their mortgages without an increase in monthly payments!
The cost of money is cheap right now, and I’m not sure that we’ll see rates this low again in our lifetimes. As you’d expect, sellers benefit too, as more people are entering the buyer pool to capitalize on these interest rates.
Let’s address COVID-19. Things are starting to reopen, and it feels as though a dark cloud has been lifted. That being said, COVID-19 hasn’t gone anywhere; we still need to be diligent. We’re seeing other states re-enter lockdown amid a resurgence of cases. Instead of speculating about what’s going to happen, I’d rather reflect on the lessons learned from COVID-19.
It’d be a tragedy if, when all is said and done, we just went back to business as usual and didn’t learn anything from this. Sometimes, we need darkness in our lives to help us learn, and reset our feet on the right path. Hopefully, this pandemic has helped you realign your priorities and understand what’s most important in your life.
Personally, I’m prioritizing my bucket list and making sure I get done what I want to get done in life. We must never take anything for granted again. Something as simple as going out to eat revealed itself to be a huge privilege and comfort.
The bottom line is our market is hot, it’s a great time to take advantage of low mortgage rates, and we’re going to be better on the other side of this health crisis.
As always, reach out to me if you have any questions about what I discussed in today’s video or real estate in general. I’m here to help and look forward to hearing from you!