Agents guiding homebuyers are facing a tough hunt these days. Real estate inventory was already at historic lows last fall and earlier this year. Then COVID-19 hit right as the spring selling season would have been in full swing.
The result? Sellers choosing to wait out the pandemic—and buyers sometimes left in bidding wars for what’s available. JMCo partner John VanDuzer recently sat down with Lisa Fetrow, a realtor with M.M. Parris Coldwell Banker, to discuss how low real estate inventory is driving the residential market.
Among the key points she made was how the shortage is more pronounced at the low to average price points.
“When you look under $200,000 in our market, we have less than one month of inventory… Five and a half months is an even market. When you realize we have less than one month, you know that it is tight,” said Fetrow. “Any buyers out there looking for a home under $200,000 are experiencing those multiple offer situations.”
While real estate inventory rises slightly as price increases, it doesn’t hit that 5 ½-month level until the $600,000 range. At that selling point and higher, more homes are available and it’s essentially a buyer’s market. But with the mid-range sale price in Alachua County between $250,000-$280,000, most buyers feel the inventory shortage firsthand.
That said, prices are not going up despite low inventory levels. According to Fetrow, the median sale price in our area for May 2020 is down 1.7% from May 2019. “A lot of people will think, ‘Oh, (low inventory) is going to drive the prices way up,’’” she explained. “But really, we’re staying very even in the price points compared to year over year…We’re not seeing anything crazy happening with that.”
Although this is possibly due to fewer buyers on the market, that doesn’t mean that sales aren’t being made. Low interest rates have created a good climate to buy a home—in part because the Fed has kept rates down to help support the economy during the pandemic.
Buyers are ready to take advantage of these rates, and many know exactly what they want. While some homeowners have tackled DIY projects during stay-at-home orders, others have decided such an undertaking isn’t for them. So these buyers want a home that’s move-in ready.
“They’re looking for the house that somebody’s already given them the updated kitchen, they’ve already updated the bathrooms, they’ve already put new flooring throughout the home,” said Fetrow. “Those things are important to a lot of buyers right now.” And with lower interest rates, these shoppers are more likely to be able to afford updated and upgraded homes.
Despite low real estate inventory—and a pandemic—all is not lost in the residential market. Far from it, in fact.
“The truth of the matter is that the buyers are still out there and looking for a home,” Fetrow said. “When you put that one on there that is priced correctly and has the things that buyers are looking for, they go quickly.”
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