One question we always receive as REALTORS is - What's going to happen next? What's the crystal ball for where prices are going over the next 12 months?
According to the NAR, Zelman, Realtor.com, Freddie Mac, CoreLogic, Fannie Mae and the Mortgage Bankers Association, the average of all those top industry insiders and economists within those groups, their prediction for the next 12 months is that we're going to see appreciation at 3.9%. You might think that sounds low. After all we just went through a year where we had double digit appreciation and in many markets we saw appreciation as high as 15-16% . Why would this group of economists predict such a low number when most of us would reasonably expect it to be double digits or high single digits (at the very least).
The reason is I think those economists know something - When you have a low supply and high demand, what happens? Prices go up. When supply increases, it puts pressure on pricing because buyers have more to choose from. The anticipation from all of these groups is that we're going to see more supply coming into the next 12 months.
Because the dinner bell has been rung. What does that dinner bell represent? It represents at least three key reasons why sellers are going to be excited about coming back to market.
Number one is home prices hitting new highs. We've just come off 12 months where home prices were increasing at a staggering pace. The average through the end of the year was about 15% nationwide. Even at the lower tier prices like $300,000 a 15% increase is $45,000 dollars!
We also have the COVID-19 vaccine that's been rolling out and it's going to continue to roll out as we move through the year. So as more and more vaccine gets distributed, people are going to feel more comfortable about people coming into their homes. As the vaccine becomes more widespread, and we start to have more immunity throughout the country, sellers are going to become much more comfortable.
And then there are record low interest rates which have hit sixty year bottoms!
Plus one more key reason, a self-fulfilling prophecy, that as more listings come to market, more listings will come to market - Why? Because it creates choice for homeowners.
The most motivated seller in the world is somebody who's already found what they want to buy. The least motivated seller in the world is someone that doesn't know where they're going to go.
So these are the reasons why the market is going to be incredible in this next 12 months and the reasons why we need to be reaching deep into our databases, working our sphere of influence, and preparing for the super surge of listings that's about ready to hit us.
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