Housing inventory is low
Although buyers are plentiful, the number of homes for sale is way lower than usual. According to realtor.com’s Monthly Housing Market Trends Report, in September, national housing inventory declined 39% over last year.
“Because the number of homes available is currently at a record low, even if we see some improvement, which I expect, there will still be relatively few homes for sale,” Hale says. “That will keep upward pressure on home prices and help ensure that homes continue to sell quickly."
"Inventory is low, so the overall advantage is with the seller,” agrees Yun.
Tracy Jones, a real estate agent with Re/Max Platinum Realty in Sarasota, FL, says buyers have so few homes to choose from these days that they’re feeling forced to make quick decisions about whether to make an offer, or risk losing out on the chance. Nationally, homes spent an average of 54 days on the market in September, 12 fewer days than last year, according to the realtor.com trends report.
“The buyers I have worked with this year only had a handful of homes to look at,” Jones says. “They had no time to wait and talk about it, and they had to fight other buyers if they wanted to buy them.”
Sellers can get top dollar for their homes
It's simple supply and demand: Low supply and high demand are bound to drive up home prices, so sellers stand to make a killing.
Across the country, median home listing prices jumped 11.1% in September compared with a year ago, to $350,000, according to realtor.com. Price per square foot increased by 13.9%.
“Sales prices and home values remain strong,” McDaniels says. And since there are so many offers on the table, “sellers can call the shots regarding terms of contract and repairs.”
The only challenge sellers face with such low inventory—if you can even call it a challenge—is dealing with too many offers at once, says Curtis.
“The challenge they face is navigating multiple offers and not accepting an offer too quickly to help ensure they get the most money for their home,” he says.
Mortgage interest rates are low
Although buyers will face stiff competition, it's not all bad news for them. For one, despite high home prices, record-low interest rates mean they'll save a ton of money.
Interest rates on a 30-year fixed-rate loan were 2.8% as of Oct. 22, according to Freddie Mac.
This “boosts buyer home purchasing power,” Hale says. “In fact, despite double-digit increases in home prices this year compared to last year, today's home buyers are likely actually paying slightly less on their mortgage each month, thanks to much lower mortgage rates.”
The Federal Reserve has continued to lower interest rates this year to keep the economy going during the COVID-19 crisis, says McDaniels.
“Even before the COVID-19 pandemic, economists and real estate professionals predicted mortgage interest rates would remain below 4% in 2020,” she says. “This means buyers that might have waited will consider entering the market this year.”
Any economic shift likely won’t be felt until spring
Although unemployment continues to rise due to COVID-19 layoffs, Hale says this could affect the real estate market, but the effects likely won’t be felt for a few months.
“A worsening unemployment rate would lead to a slowdown in the housing market and home sales, but I don’t expect that to happen immediately, more likely in the spring,” Hale says. This could create a slower start to the spring home-buying season.
Plus, if another round of stimulus money appears, this would fuel consumer spending.
“This would be a good thing for the housing market and the economy at large,” Hale says.