Jay Allen's Blog
Many of you monitor this blog for my monthly Market Reports. Extra attention should be paid to my January report because it includes data from the preceding 12 months for a much more comprehensive look at our local market. The larger data set translates to a more reliable indication of trends. As you read on, you will see that most MetroWest towns saw a SUBSTANTIAL uptick in value in 2020.
We enter 2021 in a Seller's Market. A shortage in the supply of homes to purchase combined with exceptionally low mortgage interest rates are expected to continue fueling the market and will produce fierce competition among buyers. This is welcome news to sellers, but will present a challenge to buyers who will struggle to write offers that "stand out." Buyers will need to place as much attention on the terms of their proposal as the purchase price...and some creativity (and patience) will be required to find success. Strategies like adding escalations clauses, offering flexible closings, or adding trigger amounts to home inspection contingencies will be essential. In many cases, the winning buyers are waiving their inspection/mortgage contingencies entirely!
There are two other talking points here in the early stages of the 2021 market:
1. COVID-19. It may come as a surprise, but the pandemic was a contributing factor in maintaining the Seller's Market we experienced in 2020. Many sellers were reluctant to put their homes on the market following the outbreak due to the potential health risks involved in allowing the public to enter their homes. As a result, many homeowners deferred their plans to sell. This kept the home inventory low, forcing buyers to compete for the limited home-buying opportunities that presented themselves. Simultaneously, buyers were encouraged by historically low interest rates. And their health concerns were alleviated greatly by the use of Personal Protective Equipment, hand sanitizer, and a regiment of good hygiene. Buyers have not been hesitant during the pandemic.
While the pandemic continues to be top of mind in our daily lives here in 2021, the vaccine is now within reach for a segment of the population and its availability will expand as production increases. For the time being, the prediction is that COVID will continue to impact the market in the same way it did in 2020 and help to maintain the Seller's Market.
2. Politics. It is estimated that in the months leading up to a November presidential election, buyer activity drops by as much as 10%. Buyers are looking for assurances that election results won't have a negative impact on the economy. So there is a "let's wait and see" sentiment. But, these buyers don't just disappear...rather, their home searches are simply deferred until after the new (or existing) administration moves into the next presidential term. Stock markets often wobble during these transitions, but eventually settle out...and when they do, this 10% segment re-enters the mix and will buy a home. This will create an additional boost to the spring market, which further cements the positive predictions for the 2021 market.
If you have plans to buy or sell a home this year, let's talk! Stay safe. Stay healthy.