Nearly 300% More Homes Sold with Record Low Inventory
No matter how you slice it, this has been a highly unusual year for the real estate industry and for the world. The pandemic has caused a massive shift in how people think about their home, travel, and how they envision spending time in the future. For most people, this means increasing the size of their living space, which for many has also become their working space.
The most dramatic number to talk about this month is the 283% increase in the number of homes sold compared to April 2020. It is important to note that April last year was a very soft month for the real estate industry since it was right in the middle of the first lockdown. Many home buyers initially took a “wait and see attitude” before returning to the market in full force in June. However, even taking this into account, the current sales volume is historically unprecedented and is not showing any signs of letting up, just yet.
Our internal research also shows us that prices are significantly higher in all product categories compared to last year, even compared to last month. As recently as a couple of months ago, price growth had been limited to single-family homes and townhomes. Condo pricing had fallen as buyers expressed a preference for their “own front door.” However, that shift created a price gap that condos are now rapidly increasing to fill.
The number one question that we get is “how long is this going to continue for?”
There is no question that the pace of price increases is not sustainable in the long term. At a minimum, a plateau is sure to come at some point. Having said that, with inventory slowly increasing, but still down by nearly 40% compared to last year, we need to see a lot more homes listed for sale, at all price levels, before the market levels. Currently, this inventory shortage is causing nearly two thirds of all single-family homes and more than one third of all condos to sell over the asking price in competitive bids. Ultra-low mortgage rates are also helping to fuel higher selling prices, enabling buyers to pay more for a home but still end up with a lower monthly payment.
Keep that seat belt on. It’s sure to be an interesting next couple of months.
If you would like to discuss these ideas in more depth, please feel free to give Karl Leong or Mark Roozendaal a call. We are here to help you make sense of this changing market.
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