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You've heard all the rumors about a potential housing crash and seen all of the crazy bidding wars over homes that get listed. You can't help but wonder, what is really going on with the housing market? Well, let's break it down for Michigan. After all, every state and region is different and you want the real answers.
So far, the Covid-caused crisis has unfolded in the opposite direction of what is expected in a recession. Buyers are bidding up home prices and causing homes to sell quickly in competitive housing market conditions. Currently, there is an extremely tight supply of homes on the market, the lowest on record since the turn of the century. Home price growth continues to surge in double-digits due to tight supply and lower interest rates or borrowing costs.
With the recovering economy, more buyers are entering the market. And since there remains a limited supply of housing inventory, home prices in a low mortgage rate environment may rise even more. The average prices of single-family houses with mortgages guaranteed by Fannie Mae and Freddie Mac advanced 1.4 percent from a month earlier in March 2021, the most since last October and following an upwardly revised 1.1 percent growth in February. Such home price gains are expected again until either supply ramps up or demand eases.
The differences between today's frenetic housing market and last year's frozen market are quite significant. We are having a residential housing boom driven by the improving economy and millennials reaching their prime homebuying years. Low mortgage rates and an increase in working from home ignited by the pandemic have fueled a rapid increase in housing demand — especially in lower-density suburbs. More existing homes were sold in 2020 than in any year since 2006.
So, what does this all mean for our community. Should you buy a home right now? Should you sell your home and take advantage of the increase in prices? The answer to all of the above is yes! If you're a seller you should definitely take advantage of these prices. Appraisers are able to give a value to a home that it might now have warranted a year ago. However, homes in our area are not going for the crazy prices you see all over the news ($20,000-$50,000 over asking price). Usually we are seeing $5,000-$10,000 over asking price. Buyers are able to make up this difference in cash. With that being said, is it worth it to buyer? Yes, and no. You want to make sure you're not over spending but at the same time if you really want a house you might have to spend a little more out of pocket to do so. Your Realtor should really be the one guiding you in this and if you feel they may be guiding you down the wrong path well, they probably aren't the right Realtor for you.
We are starting to see more and more homes listed which are saturating the market. Which is good! Prices are beginning to even out allowing for buyers to afford more and sellers don't have to rush to move out. We at Xsell are very optimistic about our community's housing market and encourage all buyers and sellers to be optimistic as well!
If you are thinking of buying or selling, give us a call!
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