Considering the need to sell your home in the next few years? NOW might be your best opportunity to sell at the market's peak. Historically low interest rates combined with historically low levels of for sale home inventory have created one of the strongest seller's markets ever experienced in our area. A "seller's market" puts you in control of the negotiations.
At the beginning of 2020, the Alabama Gulf Coast real estate market, like every local and national sector of the economy, was waiting to see what the rest of the year would hold in light of COVID-19. Fitting with the pattern for 2020, the Alabama Gulf Coast real estate market found an unexpected result: perhaps the best seller’s market in decades.
The combination of delayed sales due to COVID-19, historically low interest rates and a rise in the average amount of time between moves has culminated into a strong seller’s market, meaning the number of houses available for sale is much less than demand. As the laws of supply-and-demand dictate, the shortage of homes for sale has caused a rise in sales prices.
While prices drip from the month prior in February 2020 in Baldwin County, the average sales price has since risen by nearly $20,000 compared to July 2019. Same is true in Mobile County. Following a drop from the previous month in February 2020, the average sales price has risen by $15,000 from July 2019, according to stats from the Alabama Center for Real Estate.
According to the National Association of REALTORS®, the average amount of time people stay in a single home has increased by three years since 2008, one of the reasons we’re now seeing a shortage in homes for sale. But if you’ve considered the possibility of selling your home – perhaps the quarantine showed you the need for a few more rooms — the market is moving quickly, and now’s your chance to cash in on the advantages, even if it’s a bit sooner than you may have anticipated.
Data for Baldwin County shows only 2.2 months of available inventory based on the number of homes that sold in July 2020 versus 5.1 months of inventory in April 2020, and Mobile estimates only 1.2 months of available inventory in July compared to 2.1 in April 2020. That estimate, known as the absorption rate, is calculated by dividing the number of homes sold in a month (or any period of time) by the total number of homes that were available for sale. It’s one of the ways real estate professionals gauge how quickly a home is likely to sell, and as you can see, the answer right now is fairly quickly, benefitting sellers.
It doesn’t hurt that interest rates have only dropped this year. Freddie Mac reports the average rate for a 30-year fixed-rate mortgage in July 2020 was 3.02%, the lowest rate in nearly 50 years. This means if someone purchased a home in July 2019 for $300,000, assuming a 20 percent down payment and 30-year 3.77% fixed-rate mortgage, they could now purchase a $330,000 home for the same monthly price, assuming the same down payment and loan term. Buyers can afford more home for their money, and sellers benefit from an increase in people wanting to move while rates are low.
Of course, potential sellers must weigh the benefits of this historic seller’s market with the possibility of needing to find a home quickly themselves if their property sells. Considerations, like whether you’d be moving to another area that might have more inventory available, are important to discuss with a REALTOR®, who can advise you on all the options you have available. In some cases, you may be able to negotiate staying in your home an extra few months. You may also want to consider a move-in-ready new construction home. Contact a Bellator agent to discuss your options!