Let’s face it; the last year or so has been…strange. If you had a time machine and could go back to February 2020, chances are the people you’d meet there (including those on the B&C team) would call you CRAZY if you told us everything that would happen in the coming year.
There’s been a lot of tough parts of 2020 and the start to 2021, but also some bright spots. One of those bright spots has been the opportunities for homeowners. If you’ve even considered the idea of selling your home – maybe to move up to your forever home, maybe to downsize to a retirement-sized home, maybe to get out of the Michigan winters and head south, or anything in between, this article is for you.
Here are five reasons why, when you combine them together, homeowners have a once-in-a-generation opportunity RIGHT NOW.
The Inventory Shortage Is Driving Prices SKY HIGH
Unless you’ve been living under a rock (a rock that doesn’t get TV, radio, or internet), you’ve been hearing about the national real estate inventory shortage. This shortage is happening here in Northern Michigan too.
There simply aren’t enough homes to keep up with the demand for them. The laws of supply and demand dictate to us that when supply is short and demand is long, prices go up, and that is what’s happening now. The market value of homes has literally NEVER been higher than it is right now, which is giving homeowners an incredible opportunity to cash in their real estate investments for more than they ever could before.
But, as is the case in every sort of market, these conditions aren’t permanent. Eventually, inventory is going to catch up with demand, which is going to relax these prices.
The Bottom Line: Your home is worth more today than ever before, but it won’t be like this forever.
Mortgage Rates are the Lowest They’ve Ever Been
The COVID-19 pandemic and the national economic emergency that has followed it has caused the Fed to drive interest rates near zero. For those of us in the real estate industry, this means that it has never been cheaper to borrow money than it is right now. This translates to buyers having a wider range of options when it comes to shopping for a home, which translates to sellers having more available purchasers for their property.
But, just like the inventory shortage, these rates aren’t going to last forever. In fact, the likelihood that they’ll last through 2021 is pretty slim since artificially low interest rates can also result in inflation, something we as a country want to avoid.
The Bottom Line: Right now, there are more qualified buyers at every level of the market than ever before. This means that there is more competition for your home, but these rates won’t last forever.
COVID-19 Has Put More Emphasis On Home As a Place
Home has always been an incredibly important place. It is the spot our kids take their first steps, it’s where we dig into good books, where we share meals around a communal table.
We in the real estate industry know this full well, but thanks to COVID-19, home is even more than this now. It’s where we work. It’s our “safe place”. It’s the spot where many of us are spending the vast majority of our time, and so over the last year, those who didn’t have the best setups at home (but made up for it with great community amenities) have been on the hunt for a new spot.
This means that homeowners, especially those in low density areas like Northern Michigan, have a unique opportunity to market their homes to those looking to escape high density areas. The flight from major metro areas was significant in 2020, and we’re expecting a surge of it again as the snow melts here in Northern Michigan.
The Bottom Line: There are more out-of-towners looking to buy in Northern Michigan than ever before, but they have lots of options (it’s a big country / world), so that demand won’t last forever.
The Northern Michigan Rental Market is in Bad Shape
Anyone who’s ever done any apartment hunting in Northern Michigan (especially in the Traverse City area) knows that things are tough out there. If you thought the real-estate-for-sale inventory was short, you’ll be shocked by what you find in the world of long-term rentals.
This is happening in part because many of the communities in Northern Michigan have large service industries, a workforce that traditionally utilizes rental housing. Rental housing is expensive to build and in some cases difficult to make a profit on for at least 10 years following the completion of construction, so new construction is slow.
And, many of the long-term rentals in our area have recently been converted into short-term rentals, further removing more inventory from the market.
All this adds up to more and more rental seekers who decide to move into the purchase markets, especially with low-cost or no-cost loan options. This puts further pressure on the lower end of the sale market, which puts more pressure on the sectors above it.
The Bottom Line: The shortage of rental housing is causing an imbalance of demand at the entry level of the purchase market, which is further putting pressure on the rest of the purchase market, driving prices higher. But, there are new apartment projects planned, so this pressure won’t last forever.
There is Pent-Up Consumer Demand to SPEND
You’ve probably read that Americans have more in their savings accounts compared to their annual income right now than they’ve had since the start of World War 2. Many people chose to use their stimulus money to bolster their savings, pay down their debt, and set cash aside for the future. The result? Consumers have spent at record-low levels for the last year, and many of them are itching to lighten that bank account.
The idea of “retail therapy” is a real thing, and analysts in the auto industry are expecting record vehicle sales at the end of 2021, a trend that the real estate industry is expecting too.
The Bottom Line: Home shoppers have money to spend at levels they haven’t since the 1940s. This sort of consumer empowerment is already resulting in elevated interest in spending, but eventually, that demand will taper as the money is spent.
The Bottom Line
Low inventory, low interest rates, an emphasis on the importance of home, a tight rental market, and pent-up consumer demand is putting homeowners in a unique position to get more for their home than many of us in the real estate industry would have ever predicted.
We here at the Brick & Corbett Group can’t get the word out fast enough; if you own a home in Northern Michigan, you owe it to yourself to at least get a comparative market analysis done so you can see what your home would go for were you to put it on the market.
There’s no obligation or commitment to sell; all we want to do is give you the best information possible so that you can make the best decisions for yourself and the people that matter most to you. Reach out today and find out how the Brick & Corbett team can help you!
