2021 Real Estate Forecast: What now?
Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of Realtors
Honestly, though the world turmoil, fear, and division struck us all blindsided, so did the success in the real estate market last year.
Low Mortgage Rates have been the saving grace to create this thriving real estate market, despite high unemployment rates generated by the global pandemic, dropping to as law as 2.3% for some qualifying buyers.
Freddie Mac, US Weekly Average Mortgage Rates up to October 22, 2020
Looking at this chart above truly brings it home how incredibly different the housing market has been in the last 40 years. High interest rates in the 1980s crushed the housing market, which didn't return to its 1978 lows until 1996 after the interest rates were brought back down- at which time it was still above 5.0%.
Back in March 2020 with the start of the Covid-19 Global Pandemic, with the uncertainty that lie ahead, the Federal Reserve made the decision to cut rates to 0% and bought $700 million in government and mortgage-related bonds in an act to counter the effects of Covid...we'd say they've done just that. We might not be able to say the same today, if not for this quick thinking.
So, what does 2021 have in store for us?
According to Chief Economist Lawrence Yun of The National Association of Realtors, we are looking at continually low interest rates, hovering at 3%. Unemployment rates will stabilize back to around 5%. Housing prices will increase only by half that of 2020, but will still increase. Keep in mind, in a "stable" market, you will typically see the value of a home appreciate somewhere around 3-4% per year, so we are still sitting at double that.
NAR's Real Estate Forecast Summit
NAR also identified the top 10 real estate markets that have shown resilience during the pandemic and will also shine post-pandemic as these areas offer "particularly favorable conditions" according to NAR President Charlie Oppler. On that list is none other than beautiful Charleston, South Carolina.
Greer Inland Port
If you've lived in the Upstate for a while, you will have heard at least once that many believe most of our success here in the upstate is due mostly to BMW and less well-known, the Greer Inland Port, which feeds directly into the Charleston Port; a single day rail trip. That means cheap logistics for large manufacturers importing and exporting. Better news yet, a project that was started in 2011 to deepen the port, will come to completion this year in 2021, making it the East Coasts deepest port. The port currently services 100 foreign ports and will undoubtedly increase with the port expansion.
The Local Look: Spartanburg
How has the upstate faired in December? With interest rates still remaining low, sales are still churning along.
Though December is generally thought to be a slower month in real estate, the upstate saw a lot of activity. In December, Spartanburg had a total of 5,720 Closed Sales, up just 1% from 2019 which was also a markedly productive December in comparison to past years. The greatest activity was in the $200,000 - $300,000 price range interestingly as median sales prices increased to $199,900. As many have heard, low-inventory issues drove prices up, with inventory down 15.5% year over year.
Spartanburg December 2020 Closed Sales by Price Range, Spartanburg Association of Realtors
With a desire to be closer to all the new development downtown, AND with an influx of out of town buyers, AND with nice, affordable housing (under $150,000) seemingly non-existent in the single-family sector in the city limits, one of the biggest shocks was the condo market in Spartanburg. This sector of the real estate market showed an 84.6% increase in sales, from 13 to 24 units sold, December 2019 vs. 2020.
"Condos" in our upstate market can mean what you normally think of as a condo: downtown in a multi-story building, like the Library Commons, or it can also be found in "townhome" style communities such as Fernbrook on the Eastside, or West Hampton in the Moore area.
(L) West Hampton Condo, (M) Library Commons, (R) Fernbrook Condo
Many of the sales that are documented in the Spartanburg MLS are Greenville condos since many agents will list their clients homes in both markets to increase exposure. In deeper research, for 2020 as a whole, actual Spartanburg condo sales was a total of 31 sales, with a sales price anywhere from $34,000 to $215,000. With a median sales price of $92,000 this lends to the statement above that buyers are looking for more affordable housing in this condo sector versus the single-family sector who's prices have risen too high for many young, first time home buyers. An added benefit to these condos are their location and nearby conveniences that further increase their attractiveness to all demographic of buyers.
As of January 12, 2021 Spartanburg MLS had 209 New Listings, 167 Sold, and 470 Pending Sales... right on track for another great month!
How fast are we moving???
One of the biggest trends I've heard from all the sellers I've talked to in 2020 is the fear of getting the home sold faster than you can find the one you want to buy. Generally speaking, it takes 30-45 days to close a sale once a buyer agrees to buy. When buying and selling, this can occur simultaneously which for many clients can be a lot on their plate on top of normal daily life.
But what about before you have a buyer that agrees to buy? The average days on market before an offer was received for all price points was 57 days. Here's a break down by price range:
Days on Market Until Sale, Spartanburg Association of Realtors
This is quite surprising, given that in the $100,000 - $200,000 price point the top, most desirable homes will be on the market for no more than 2 days before an offer is accepted, if that. Regardless, in comparison to 2019, we're seeing a decrease in days before an offer by almost 50%!!! *Though these numbers could mean you'll have plenty of time to find the next house, it's always better to be prepared to sell within at least a week of listing.
We hope you found this information helpful! Please feel free to contact us to discuss your homes potential value and if buying and/or selling makes sense for you in 2021.
Call or Text 864-431-3278