With low inventory and high buyer demand, homeowners could earn a larger profit on their houses and sell them quickly.
The greater Pensacola area has experienced a rise in property values during an extraordinary global health crisis. This may seem absurd, but we are not alone! All across the country, homeowners have seen the very same trend.
Where We Have Been
The consequences of the 2008 housing crisis impacted the area as they impacted the rest of the country. The excessive amount of speculative buying came to a halt and left an abundance of inventory, driving prices down since pre-recession levels.
Where We Are Currently
Today, we have the Dodd-Frank act in place which requires lenders follow strict guidelines to verify income and debt ratios. The difference between then and now is home values are being fueled by qualified buyers and extremely low levels of inventory, resulting in consistent appreciation over time.
Currently, most homeowners have more equity than they realize. According to John Burns Real Estate Consulting, over 42% of homes are owned free and clear, meaning they are not tied to a mortgage. Of the remaining 58%, the average homeowner has $177,000 in equity.
Homes Are More Affordable Right Now Than They Have Been in Years
While home prices have risen for 97 consecutive months, July’s record-low mortgage rates have made purchasing an average-priced home the most affordable it’s been since 2016.
Buying power is up 10% year-over-year, meaning the average home buyer can afford nearly $32,000 more home than they could at the same time last year, while keeping their monthly payment the same.
In addition, with mortgage rates hitting all-time lows eight times this year, it is now less expensive to borrow money than ever before, making homes significantly more affordable over the lifetime of the loan.
The Biggest Perk for Sellers: Low Inventory
Today, there are simply not enough houses on the market for the number of buyers looking to purchase. According to the National Association of Realtors (NAR):
“Total housing inventory at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million).”
As indicated in the bottom left graph, the number of houses coming into the market continues to decline. Inventory was low as we entered the pandemic and has decreased even further. Houses today are selling faster than they’re being listed, which creates an even greater supply shortage.
The lack of inventory has been a challenging situation for buyers, and with low mortgage rates fueling buyer demand, the perfect house is even harder to find. Buyers are eager to purchase, and because of the shortage of homes available, they’re encountering more bidding wars, which keeps home prices strong, and creates a major advantage for sellers.
Historically, real estate has been one of the safest investments, overtaking stocks, saving accounts and gold. At Levin Rinke Realty, we believe it is vital for our clients to understand all aspects of the ever-changing market. We are proud to be your trusted real estate advisors in the Escambia and Santa Rosa counties. If you’re ready to buy or sell, please reach out to any of our experienced advisors for an insightful market overview.