WHAT IS THE HOTTEST TOPIC IN REAL ESTATE?

What is the hottest topic in real estate today?  It’s the lack of inventory of homes for sale.  Look at the chart below.

The downward trend for inventory began in late 2011 as the housing crisis eased. At that time we had about 12 months of inventory.  It was a buyer’s market in every way.  A healthy market- one that favors neither buyers or sellers- offers about 6 months of inventory.  This means that if no more homes were listed, then all current homes on the market would be sold in about 6 months.  But at the end of February 2021, there are only 0.6 months of inventory.  This number is the lowest in recent memory and favors sellers in every way.

The chart above is an average for all the counties in the greater Charlotte metro area.  The story is the same for individual counties.  As of the end of February 2021, here are the month’s of inventory of homes on the market:

Iredell: 0.7 includes Mooresville and Statesville.

Lincoln:  0.9  includes Lincolnton

Gaston:  0.6  includes Gastonia

Mecklenburg:  0.6  includes Charlotte, Matthews, Huntersville and Davidson

Union:  0.5  includes Monroe

Stanly:  0.8  includes Albemarle

Cabarrus:  0.4  includes Concord and Harrisburg

Rowan:  0.7  Includes Kannapolis and Salisbury

Catawba:  0.8  includes Denver and Hickory

It’s Great News For…

This is great news for sellers.  Homes are selling faster and for more money.  It’s not uncommon for homes to go under contract while in “Coming Soon” status, which means they are selling without any showings.  This just happened to me with one of my listings.  The house was being marketed as Coming Soon, and I received an offer that was $10,000 over asking price and had great terms.  It was in the best interest of my seller to accept.  Listing agents are being hit with multiple offers, which drives the price up.  This is a double-edged sword as some homes are not appraising for the contract price.  It does not always pay to accept the highest price.  The terms of the agreement may be more important.  Lean on your real estate professional for help deciding which offer is the best for your situation.

It’s Bad News For…

It’s bad news for buyers, especially first-time home buyers.  When a home hits the market there is fierce competition from the average buyer, ibuyer, and investor.  The cash buyer today has a leg-up on everyone else as they typically are favored by sellers because a loan is not involved, which reduces the risk of the buyer backing out of the deal since it removes any risk of the buyer not qualifying for a loan.  Cash buyers also have a greater ability to offer more than the asking price and offer a much higher due diligence fee and earnest money deposit.  Many buyers are frustrated right now, understandably so, because their offers are not chosen.  However, buyers can tap into ibuyer options like Knock and Ribbon in order to compete.

Bottom Line

Most homes fly off the shelves when listed.  There has never been a better time to sell in recent memory.  Mortgage interest rates, while up a bit, are still close to historical lows.  The problem for sellers is that they may not have anywhere to go after selling.  I’m finding some sellers building a new home and are able to list their home, sell it quickly and lease it back from the buyer until their new home is completed. 

I don’t want it to sound grim for buyers.  We all have to follow our budgets.  If you are a buyer and want to know how to give it your best shot then read my blog post about how to compete in a seller’s market.

It sounds like a rosy picture for sellers.  It is.  But selling your home is a tricky process with volumes of forms and rules and regulations.  Going it alone may not be in your best interest.  Your real estate professional, that’s me, can save you time, money, liability and hassle.