This year has been a not-so-fun roller coaster ride for everyone and for almost all things; the housing market is no different. While things slowed down in the usually-busy spring with stay-at-home orders and new safety and operations protocols, the industry has fortunately managed a huge upswing in a hurting economy!
A home with many purposes
With a huge part of the workforce going remote and many families taking part in distance learning, many buyers are looking to find their dream homes. A home has gone from a place to lay one’s head, to a sanctuary, an office, and a school. These added facets to a home’s benefits and purposes have motivated buyers despite uncertain times. Another factor contributing to the housing market’s traction are the record low interest rates on 15 and 30 year loans.
Michigan real estate holding steady
While the trend from summer to fall typically starts a downward trend in the buying and selling of homes, fall 2020 has been anything but typical. Despite the recession and hit on many markets and industries, the real estate market in West Michigan has been holding steady.
A seller’s market
The housing market currently favors sellers. Simple supply and demand, inventory is low, while demand is up. Even though Michigan’s housing market is one of the most affordable in the nation, it’s prices are climbing and up 6% from last year. Nationwide, homes are up 5.5%. While The Great Depression worthy interest rates are helping keep homes affordable for some buyers, according to Bridge Michigan, there are many that worry it won’t be sustainable. Low inventory, high demand and soaring prices could quickly price many people out of the market according to the Michigan State Housing Development Authority.
Changes in 2021
Heading into a new government administration other changes to the market will likely be coming down the track. While interest rates will likely stay the same, individuals who make 400K or more and who are interested in selling their homes, may be looking at an increase in capital gains taxes per the new administration’s tax plan.
Bad news – an increase in foreclosures
Unfortunately, real estate experts are predicting an increase in foreclosures in 2021 as the pandemic continues, the moratoriums on foreclosures end, defaults increase on people’s student loans and other debts, and unemployment rates continue to rise. According to ATTOM (a leader in real estate data collection), foreclosures have increased by 20% since October. This could be good news for buyers as it will likely increase the amount of inventory which would flatten out home prices.
As the new year approaches, it is hard to predict how things will be affected as the COVID-19 roller coaster continues. Keeping a close on how long homes are staying on the market and whether demand goes down will give us a good indication of how the housing market will be impacted in 2021. One thing is for sure, I am here for you for any of your real estate needs. Please feel free to contact me with any of your questions and concerns regarding buying and/or selling your home. I can give you the latest information and help you make the most informed decision about your next steps.