If you’re a prospective buyer or seller, it’s important to understand the current real estate market conditions and how they affect you. The Counselors of Real Estate (CRE) just released its Top Ten Issues Affecting Real Estate report. Here are three hot topics from the list and how they impact today’s housing market.

Technology Acceleration and Innovation

The past year ushered in many changes to the real estate industry, especially when it comes to technology. The CRE report elaborates on this:

“Lockdown-driven changes in our work, in the economy, in social structures, and in our personal behavior have pushed our reluctance aside. The acceleration and adoption of technology during the pandemic has impacted everything, and real estate is no exception.”

For real estate, innovations like digital documentation, virtual tours, and video chat enable agents to connect with clients no matter their location. These options are ideal for prospective buyers and sellers who aren’t local to the area or those that need the added flexibility signing documents online or doing virtual tours provide. That’s why many trusted real estate advisors will continue to use these technologies moving forward to best serve their clients.

Remote Work and Mobility

Working from home became the reality for many individuals during the pandemic, and the latest list from the CRE identified remote work and mobility as an important influence on the real estate market. As the report notes:

“…the pandemic universally caused a movement away from urban cores, particularly for those with higher incomes who could afford to move and for lower-income individuals seeking lower costs of living. Most of these relocations remained within their original region—84%—and, while some are returning, it is unknown as to the permanence of these movements or whether they represent a true urban exodus.”

With the added mobility remote work offers, where people are moving and where they can ultimately purchase a home is less dependent on a physical office location. This newfound flexibility is giving remote workers the opportunity to move to more affordable areas and buy more home for their money.

Housing Supply and Affordability

Finally, the limited supply of houses for sale and the related affordability challenges also makes CRE’s list of key factors this year:

“According to the National Association of Realtors®, the state of America’s housing inventory is dire, with a chronic shortage of affordable and available homes needed to support the nation’s population.”

There is good news. Homes are still more affordable than they have been historically thanks to today’s low mortgage rates. And while housing supply is still low, we’re seeing steady increases in the number of homes coming to market, which gives hope to homebuyers. As the supply of homes for sale improves, buyers will have more options.

Bottom Line

New technology, remote work, housing supply, and home affordability are key factors in the housing market right now for both buyers and sellers. If you want to better understand how these topics can impact you, let’s connect today.

As we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here’s a look at four key components that are shaping this unprecedented market.

A Shortage of Homes for Sale

Earlier this year, the number of homes available for sale fell to an all-time low. In recent months, however, inventory levels are starting to trend up. The latest Monthly Housing Market Trends Report from realtor.com says:

“In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.”

This is good news for buyers who crave more options. But even though we’re experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states. That’s why it’s still a sellers’ market, giving homeowners immense leverage when they decide to make a move.

Buyer Competition and Bidding Wars

Today’s ongoing low supply, coupled with high demand, creates a market characterized by high buyer competition and bidding wars. Buyers are going above and beyond to make sure their offer stands out from the crowd by offering over the asking price, all cash, or waiving some contingencies. The number of offers on the average house for sale broke records this year – and that’s great news for sellers.

The latest Confidence Index from the National Association of Realtors (NAR) says the average home for sale receives five offers (see graph below):For buyers, the best way to put a compelling offer together is by working with a local real estate professional. That agent can act as your trusted advisor on what terms are best for you and what’s most appealing to the seller.

Home Price Appreciation

The competition among buyers is driving prices up. Over the past year, we’ve seen home price appreciation rise across the country. According to the most recent Home Price Index (HPI) from CoreLogic, national home prices increased 15.4% year-over-year in May:

“The May 2021 HPI gain was up from the May 2020 gain of 4.2% and was the highest year-over-year gain since November 2005. Low mortgage rates and low for-sale inventory drove the increase in home prices.”

Rising home values are a big part of why real estate remains one of the top sought-after investments for Americans. For potential sellers, it also means it’s a great time to list your house to maximize the return on your investment.

A Rise in Home Values and Equity

The equity in a home doesn’t just grow when a homeowner pays their mortgage – it also grows as the home’s value appreciates. Thanks to the jump in price appreciation, homeowners across the country are seeing record-breaking gains in home equity. CoreLogic recently reported:

“…homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion, and an average gain of $33,400 per borrower, since the first quarter of 2020.”

That’s a major perk for households to leverage. Homeowners can use that equity to accomplish major life goals or move into their dream homes.

Bottom Line

If you’re thinking about buying or selling, there’s no time like the present. Let’s connect to talk about how you can take advantage of the conditions we’re seeing today to meet your homeownership goals.

Residents along the Front Range have had to repeatedly deal with sticker shock, ever since home prices started rising back in 2012. For 2021, the median increases in home values over a two-year period ranged from 7% in Broomfield, Denver and Arapahoe counties to 11% in Boulder County.

That’s much tamer than 2017, when the median gains in residential value ranged from 17% in Douglas County to 40% in Adams County or 2019, when the median gains ranged from 13% in Boulder County to 24% in Adams County.

So, what is there to do?  Some will shrug in resignation (you know the old “death and taxes” quip?), others will find the value about right and a few will feel something is not quite right and decide to appeal what you may consider an inflated value.

If you feel your new valuation is incorrect, you have until the end of May to file an appeal with the county assessor. Typically, that can be done online, over the phone or in person, although many metro counties require making an appointment to come in because of COVID-19. But it’s free, other than the time required.

How can you best prepare for your appeal? 

Zero in on the property value that the assessor has come up with, and try to determine if it accurately reflects what was going on as of June 30, 2020. Appeals should be based on the three C’s of a property:   

• Characteristics:  If the county property / public record claims a home has four bedrooms when it has only three, or the square footage is overstated, that would make for a solid appeal based on characteristics.

• Condition:  If the other homes in the neighborhood are all renovated, while yours could serve as a stage set for “That ’70s Show,” then consider a protest, although that battle will be more subjective and tougher than one based on hard facts.
• Comparables:  If the characteristics as reflected in the public record and condition are correct, the best information you can provide are similar sales in the base period to support a value reduction.  The key with comparables is to find home sales with similar characteristics and in a similar condition. And while sales across a two-year period can be used, the closer to June 30, 2020, but not a day after, the better.  Some counties list the comparable home sales the assessor used to determine a value. Try to find better ones and support why they are better.

Want to appeal and feeling overwhelmed with the above?

 You’ll be happy to know, as your “Real Estate Advisors for Life,” we are here to help! Give us a call, text or email and we would be happy to assist you evaluate your current valuation, access the property’s public record and help get you better data to submit with your appeal.

All things considered, depending on the county and how well researched an appeal is, the odds of getting a downward revision in value are pretty good. In Denver, about half of residential appeals result in a revision.

This months market update is one you won’t want to miss!

(3)  So, what’s the catch?  How do they make a profit?

If you are considering selling your home, we recommend you reach out to an experienced Realtor (hint: US!) to help determine the best way to sell your home. With The Nelson Team on your side, we can maximize convenience AND profit for you!