2021’s Red Hot Housing Market
Despite a plunge in temperatures, housing supply and days on market, buyers enter the new year undeterred.
The start of any new year is rooted in the “out with the old, in with the new” mentality. That was especially true as 2020 drew to a close and 10,000 steps around the living room didn’t put as much pep in your step as it once did. In early 2021, the housing market increasingly has shown that buyers, who remain largely unfazed by the challenges presented by an uncertain economy and the pandemic environment, are re-evaluating their current spaces. That could be in part due to historically low mortgage rates and the increasing amount of time we’re spending at home for tasks like school and work. According to the RE/MAX National Housing Report for January, home sales in the month posted a 13.5% increase over a year ago.
While experts predict the current housing shortages are likely to turn around as homebuilder confidence grows, the supply and demand imbalance of 2020 has continued in the first month of the new year – causing the market to remain HOT, even while it’s, err, freezing outside.
January inventory dipped to the lowest level of any time in the 13-year history of the RE/MAX National Housing Report. It was a 35.7% drop year over year – also a report record – and marked the fifth consecutive month of year-over-year inventory declines over 30%.
Advantages exist for both buyers and sellers right now, and it seems as though the appeal of homeownership has never been higher. Although the growth in sales moderated a bit and returned to a more pre-COVID seasonal rate, housing’s record-setting, second-half recovery in 2020 set the stage for what could be a very big year for sales.
“January home sales started the year off with a bang despite the current shortage of homes for sale,” RE/MAX Holdings CEO Adam Contos says. “January’s year-over-year sales increase wasn’t as pronounced as what we saw in the back half of 2020, but it was solid by any objective measure – and it signals that 2021 could be an historically good year for housing. Uncommonly low interest rates, the ascent of the millennial homeowner and the prospect of working from anywhere are converging to shape a housing market unlike any other. We could see mortgage rates begin to inch up soon, so now might be an ideal time for homebuyers and sellers to make their move and take advantage of the favorable conditions.”
Whether you’re a buyer or seller or one of those millennials browsing real estate apps late at night (😉) here are the highlights of the latest data in the RE/MAX National Housing Report:
1. Inventory is Way Down
The number of homes for sale in January 2021 was down 12.1% from December 2020 and down 35.7% from January 2020. Based on the rate of home sales in January 2021, the Months Supply of Inventory decreased to 1.7 compared to 1.9 in December 2020, and decreased compared to 3.5 in January 2020.
A six-month supply indicates a market balanced equally between buyers and sellers. In January 2021, of the 53 metro areas surveyed, only one metro area, Indianapolis, IN at 9.8, reported a months supply at or over six, which is typically considered a buyer’s market. The markets with the lowest Months Supply of Inventory were a two-way tie between Albuquerque, NM and Boise, ID at 0.5, and a four-way tie between Phoenix, AZ, Denver, CO, Seattle, WA, and Salt Lake City, UT at 0.6.
2. Home Prices Are Increasing
With so few listings hitting the market, sellers are seeing favorable conditions, especially as bidding wars have become more common. No metro area saw a year-over-year decrease in Median Sales Price. In January 2021, the median of all 53 metro Median Sales Prices was $285,000, down 1.7% from December 2020, and up 11.8% from January 2020. Forty-five metro areas increased year-over-year by double-digit percentages, led by Boise, ID at +24.3%, Pittsburgh, PA at +21.3%, and Indianapolis, IN at +20.5%.
3. Days on Market Are Dwindling
Days on Market is the number of days between when a home is first listed in an MLS and a sales contract is signed. The average Days on Market for homes sold in January 2021 was 40, up three days from the average in December 2020, and down 19 days from the average in January 2020. The metro areas with the lowest Days on Market were Omaha, NE at 18, Boise, ID at 19, and a two-way tie between Cincinnati, OH and Nashville, TN at 21. The highest Days on Market averages were in Des Moines, IA at 99, Miami, FL at 88, and Augusta, ME at 78.
While a shift to a more balanced market is still off in the distance, RE/MAX agents are prepared to navigate any environment on behalf of their clients. Contact your RE/MAX agent today if you’re ready to make a move.
Article originally appeared on RE/MAX.