I’ve always been a real estate lurker. I browse listings in my hometown and various vacation destinations all the time, looking to see what’s moving and for how much. This goes back a decade-plus, and I haven’t bought a single home in that time.
Let’s just say I like to be informed.
So, when asking prices started to tick up over the last few years I took notice. Then in 2020 things took a surprising turn. Instead of tanking during the pandemic, sales activity shot up all over the country. Suddenly condos that were trading for “normal” prices for years were going for millions and more. It was like watching the whole market melt up in real time.
The real estate market is red hot, and sellers know it. That’s why they’re asking more and more for their properties, and often getting it.
Agents refer to this as the “make me move” approach and it’s upending the real estate market.
A hot market that just keeps getting hotter: The median price for a home in the U.S. topped $350,000 for the first time ever in May, up a staggering 23.6% from a year earlier to mark the 111th straight month of year-over-year gains, according to the National Association of Realtors.
Just think about that for a moment — if you invested in a stock and saw 23% gains in a year, you’d be pretty happy, right? Now multiply that gain by the price you paid for your house. We’re talking big money here. It’s no surprise that, according to Realtor.com, 94% of sellers today expect their homes to sell for more than they paid and a third plan to list their home for more than they think it’s worth.
That’s a pretty good reason to sell.
Quote: “There are a lot of homeowners in secondary and tertiary markets that never imagined their market could go up 20% to 30%-plus in a year,” Palacios now says. “I suspect homeowners there are realizing the timing makes sense to throw out a big listing price given the outsider money now flooding into their once-sleepy markets.” — Rick Palacios, director of research at John Burns Real Estate Consulting
What does this mean for the avearge buyer?
There’s a lot driving this market: lack of inventory due to the pandemic and high lumber prices, increased demand for larger homes outside of city centers (again due to the pandemic), and the growing fear of missing out among sellers who want to max out how much they get for their house.
But remember that this is a two-way street. Yes, you can list your house for more than it might be worth and probably get it this year, but how confident are you that you’ll be able to find a new place to live at a price you’re willing to pay for it?