As the real estate market approaches its 2021 spring season, one would expect homebuyers to typically begin to peek their heads out, relieved their winter hibernation is waning.
But, if you haven’t noticed, there is nothing typical about the current real estate market or the events of last year. Most real estate gurus agree that the real estate marketplace is on fire, without what appears to be anything to slow the demand or recent price increases.
Even with an increase in mortgage interest rates (of course, off historic lows) and COVID-19 fatigue settling in, the real estate market continues to offer economists a riveting look at how real estate does not always behave in predictable ways, and at times, even appears to act like a rebellious teenager.
The current marketplace is being influenced (more like driven) by these market characteristics –
- The market entered 2021 with interest rates at historic lows (FHLMC reported the 30 Yr. FRM was 2.65% in early January 2021). Interest rates rose a bit to 27% by the second week in April, but most economists anticipate that rates will remain relatively low for the foreseeable future.
- Inventories are likely to increase (due to the season and several other factors). Still, the additional inventory will NOT cause a significant shift in the market from a seller to a buyer’s market. This also implies that the market will remain highly competitive, characterized by multiple bids, bidding wars, and strong prices.
- Interest in purchasing properties closer to or within suburbs will persist, but renewed interest in more urban areas will likely occur.
However, underneath the recent meteoric growth that has driven this market, fundamental metrics regarding the real estate market are still at play and very much influence much of the real estate activity. So, if you have been seriously considering selling your home any time in the near future, it is important to understand the reasons Spring is considered the time to make a move in the real estate market. The narrative that follows focuses on the seller’s side of the home buying equation.
- 1 4 Reasons to Sell Your Home During the 2021 Spring Season
- 1.1 Reason # 1 – Spring is the Primetime Buying Season & the Buyers are Plentiful
- 1.2 The Largest Generation – Millennials Now Define a Staple Demographic in Real Estate Purchases
- 1.3 # 2 – The Weather is Generally Cooperative.
- 1.4 # 3 – It is a Seller’s Market.
- 1.5 #4 – Inventories Will Likely Be Increasing.
- 1.6 Tips to Take Advantage of the Surge of Homebuyers During the Spring Season
- 1.7 Wrapping Up
4 Reasons to Sell Your Home During the 2021 Spring Season
Reason # 1 – Spring is the Primetime Buying Season & the Buyers are Plentiful
It is no secret to real estate experts that the number of homebuyers tends to taper off during the winter months. Much of the reduction in real estate activity is due to inclement and cold weather; however, a combination of holiday obligations and schools-in-session causes many homebuyers to press pause on pursuing the new home they wish to purchase.
By the time April arrives, cabin fever has hit its maximum, and buyers return to actively reviewing listings and to touring homes online and in-person.
Independent of the current demand for homes caused by the pandemic’s arrival, history has taught that a majority of homebuyers prefer to buy a home and move during the spring and summer seasons. The logic behind this long-standing buyer’s maneuver simply reflects that most families find it easier to negotiate a purchase/move while members of the family are typically on vacation and the days have longer daylight hours.
The Largest Generation – Millennials Now Define a Staple Demographic in Real Estate Purchases
According to the United States Census, the number of Millennials in the nation now surpasses the number of Baby Boomers, as of July 2019. Statisticians reveal that immigration is the largest contributor to this group, with a projected peak amount in 2033 at about 75 million millennials. [See Graph]
Just a few years back, members of the Millennials were new to the process of home buying, and interest rates were higher. Millennial buyers have helped modify the real estate industry by mainstreaming the use of technology in the real estate buying process – with MLS listings seamlessly picked up by Zillow and Redfin, among others. Which, in a year defined by school closings, lockdowns, and business restructuring, the ability to tour a home virtually became key to keeping real estate transactions moving forward.
Additionally, the year 2020 allowed many Millennials the opportunity to save, which makes them even more prepared to purchase their first home. The reality is that the market is competitive, and at times, frustrating, but younger buyers tend to have the tenacity and commitment to remain with their home purchase objective.
# 2 – The Weather is Generally Cooperative.
When spring-fever hit this year, the need to get outside was stronger than in previous years due to the lockdowns put in place to protect the public from a raging global pandemic.
While Spring often brings showers at times, the grip of cold weather has been released for most of the country. Moderate temperatures and bright sunshine attract hibernators to outdoor activities.
Spring is a great time to take amazing photographs for listings, which encourages buyers to take a closer look at your home. Additionally, the Spring season is when curb appeal, one of the most important aspects of attracting buyers, is enhanced by the trees moving towards full-bloom, the flowers colorfully improving homes and yards, and the grass with an ever-deepening color of green.
# 3 – It is a Seller’s Market.
Historically low interest rates on mortgages, coupled with the largest generation becoming a primary demographic in the marketplace, and the changing structure of how a business conducts its operations, has created a strong demand for real estate throughout 2020, which continues into the first quarter of 2021.
A seller’s market is defined when the pace of demand for home purchases outpaces the available inventory of homes for sale. Market economists expect sellers to remain in command at least through the 2021 summer season, with prices likely to climb higher as a result of that demand. The demand created over the past year resulted in a median home sales price for existing properties of $313,000 (NAR 3/22/2021) for February 2021 – nearly 16% higher than that of the previous year. The NAR also notes that all regions in the United States posted price gains of at least double digits.
For sellers, the current market offers an ideal opportunity as multiple buyers are often vying to purchase one solitary listing. It is noted, however, that most home sellers choose to purchase another home – for various reasons, which is why without new construction, the number of homes available for sale does not change significantly. This is addressed below.
#4 – Inventories Will Likely Be Increasing.
In March of 2021, the number of homes listed for sale on the market was about 52% lower than twelve months earlier. (NAR 4/1/2021) The 2020 market’s low inventory was likely because many property owners proactively chose NOT to move if the home they already owned met the newly defined needs for family members to work virtually, study remotely, play, and live simultaneously, with some semblance of harmony.
Low inventory in the real estate market results in purchases being cognizant of these issues –
- Purchasers can anticipate that their bids will likely be one of the multiple bids on some homes, which may drive the price of real estate higher.
- Purchasers should adjust their anticipated search time due to the current real estate market’s characterization.
As vaccination rollouts help to curb the pandemic’s outbreak, it appears as if sellers are following seasonal market metrics and showing growing hope of an end to the lockdowns created by COVID-19. A NAR report denotes that March 2021 listings were 20% lower than the previous year; however, the difference in listings for February 2021 was even higher – at 24.5%, compared to February 2020. So, inventories are improving.
Additionally, other market indicators – like decreasing unemployment rates have helped to reduce the anxiety and uncertainty that caused home sellers to place their home sale plans on hold. These small indications, plus the arrival of the Spring season will likely increase inventories, but at a somewhat measured pace since many sellers buy another home after selling.
As noted previously, new construction will likely ease the rampant demand for housing, and recent data shows that builders are at least working towards that goal. In February 2021, there were, according to the US Census, 17% more authorized building permits issued (1.68 million for privately-owned new house units) in the nation than the previous year, in February 2020. And, as the weather improves, many parts of the United States enter into ideal construction conditions. Many real estate professionals expect these newly constructed homes to be brought to market (and likely sold) even before they are completed.
Tips to Take Advantage of the Surge of Homebuyers During the Spring Season
To ensure you receive top dollar for your home – even in a seller’s market, a seller must seek to place their home and the home’s features in its very best light. Consider some of these home selling tips:
- Price your home right the first time. Homes that have been overpriced will find that it becomes difficult to bring back potential buyers who have already moved onto other options if the initial price was out of their defined price range. Staying competitive is key – even in a seller’s market.
- Be proactive and prep your home before selling. It is helpful to consider professional staging, which helps the home to be showcased at its finest.
- List your home on the day that has been shown to be the best in your market and location. Most agents agree that Thursday is generally the best day to achieve these desired results. Thursday is generally preferred as it allows potential buyers the opportunity to set plans to see the home the next weekend.
Spring is the undeniable champion of all seasons with regard to selling one’s home. While the warmer temperatures offer more cooperative weather, most buyers have definitive goals to close, move, and settle in before the Fall season and school begins.
The spring real estate season marks the beginning of the heated season of buying and selling across the country. Selling one’s home will likely mean that you will be purchasing another home. These dual transactions require sellers to manage many moving parts to accomplish a buy and sell at the same time. So, the sooner one can begin the process, the more time you will have to reach your objectives.
And while the Spring season is an excellent time of the year to sell, it is equally essential to start as early as possible to ensure you reap all the benefits the Spring selling season has to offer.
It is noted that the real estate market data used in this analysis represent the current market and expectations on a national level. Each marketplace will vary and perform based on the characteristics of that particular market at that time. To ensure you understand your options, it is prudent to speak with a real estate agent and mortgage professional to help make smart decisions. Together, these two real estate professionals can you navigate your market.