Market Update Fall 2021
Are home sales cooling off? That is the question. The previous twelve months (August 2020 thru August 2021) have been an unprecedented roller-coaster ride for home sales. Never before has the market been so favoring of sellers. Never before has it been anywhere near this lopsided. In 2018, the average number of homes on the market in the greater Albuqerque area hovered around 5,000. In the previous twelve months, that number has been around 1,000. Where the average time to sell was around 30-45 days, that number has averaged just under a week, with many homes selling in one day.
What does a sellers market like this look like to prospective buyers and their agents? It looks like lines of people waiting to see a home on the first hour of it being listed. It looks like many cash offers pouring in on the first day. It looks like first time buyers getting completely ignored, as the cash buyers come in and offer over list price. It looks like Black Friday at the electronics store. Many, many buyers waving money, and very few willing to sell.
Industry experts believe the onset of COVID-19 has as much to do with this phenomenon as the historically low interest rates. For one, the security of owning a piece of property, whether as a residence, an income property, or vacation home, has always been a good safe harbor for wealth, and with the uncertainty of the pandemic, people want to gobble up all the real estate they can. As for the potential sellers, they don't want to open up their home for sale due to the fears of possibly infected strangers perusing their home. And they want to hang on to what they already have.
And so the inventory has been bare bones like never before and buyers are as hungry as ever.
Interest rates are the other ingredient to the storm. Rates are still very, very low. They have come up slightly, but are still much lower than in previous years, making mortgage loans a steal. "Free money" is the term I hear often, and there's no doubt the market has responded. However, many Realtors admit they've never seen so many cash buyers as in the last twelve months either, and interest rates mean nothing to them.
So where are we headed? The short answer is nobody knows, and nobody ever did know where the market was heading. Home prices rose sharply in the last twelve months. Will they stay there? Will they go up more? Will they fall down a bit? Nobody knows.
But as an active Realtor representing buyers, I have sensed a slight relaxation lately. More than a few homes I have shown to prospective clients, that, with my keen eye and analysis tools, I thought should have flown off the market, are still there waiting for new owners. "Strange," I thought. There are plenty of homes that won't sell, even lately, but there are always reasons. Greedy asking prices and poor condition is most of it. But these homes look like winners and they are priced right and the surely flummoxed sellers are wondering the same thing I am...Is the honeymoon over for sellers?
Well, who knows, but this could be GREAT news for buyers (especially first-timers). Knowing that a home isn't getting any offers is music to a buyer's ears. Finally they have a chance.
There was a time (2009-2011) when sellers would bend over backward to attract buyers with neon signs and trumpets, concessions, begging someone to buy their home. And crickets. Buyers had superpowers back then.
Hopefully the pendulum will loosen a bit and ease up somewhere in the middle.