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Housing Market Rockets Along, When Will It End?

Category: Retirement Real Estate

July 3, 2021 — Existing home prices hit a record high in May at a median of $350,000, according to the National Association of Realtors (NAR). A shortage of inventory and building materials, low interest rates, flush and frustrated buyers, and pent-up demand are some of the reasons why. Everyone seems to have a tale to tell in this crazy, red hot market: houses that sell the same day they are listed, multiple competing bids, offers of $100,000 or $200,000 more than the asking price, even huge cash payments to walk away to allow the next buyer in line to get the property. The Case-Shiller Home Price Index for April confirmed the rising market, finding that prices rose at their fastest pace ever, an amazing 14.6% year over year.

So what’s next for sellers?

Baby boomers and retirees are more likely to benefit from this hot market than younger people, who are often first time buyers. That is because we usually have something to sell, and our homes are suddenly worth a lot more than they were 18 months ago. So if you are retired or about to retire, this might be the ideal time to step away from your existing home and move to one that is more conducive to your desired retirement lifestyle. You will most likely get top dollar when you sell – but what will your next move be? We were very interested in a new survey by Coldwell Banker conducted among all homeowners (not just retirees). It seemed to indicate that people are using the hot real estate market to dramatically change their living situation. Their survey found that about 20% of homeowners hope to sell their current home in the next year. Of those, about six out of ten plan on relocating to a different city or state. Does that describe you?

Unfortunately the crazy market can be tough on retirees who are looking for home to buy in one of the hottest real estate areas and climates. The most desirable homes are getting snapped up, frustrating those who make multiple offers, only to be outbid or outmaneuvered by buyers with deeper pockets. We have two set of friends who decided it was time to sell their pre-retirement homes, but then had to scramble to find somewhere to live (the rental market is tight too). One couple had to resort to three different rentals over 12 months while they waited for their new home to be finished – and each rental required a scramble to find. They are only moving to the next town, but the other couple is evaluating whether to move out of state or not. It can be a tension filled period; will prices are going to continue to escalate in a tight market, or will the bubble burst and all kinds of possibilities open up? Unfortunately, no one knows how it will end (except at some point there has to be a correction), and buying high and selling low is not much fun.

Your plans? We are always eager to see how you are feeling about the real estate market. Have you recently bought or sold, or are you thinking about that. If you do sell, where and how far will you move, and what areas are you considering? How do you read the tea leaves of the 2021 real estate market? Please share your thoughts in the Comments section below.

Posted by Admin on July 2nd, 2021

9 Comments »

  1. We have experienced both sides of the up and down real estate market. We purchased a beach condo in 2005 in a new development where investors were buying several units at a time. A unit came available when a buyer backed out and we snatched it up. We operated it as a vacation rental for 10 years until rental restrictions and taxes and fees made it unprofitable. We put it on the market in 2016 and it took two years before we received an offer as the bottom had fallen out of the that market. We lost $100,000 on that deal.

    This year, we decided to downsize and sell our large family home. Our agent balked at our suggested listing price because she thought the price per square foot was too high. However, we wanted to see what would happen. It sold in 3 days for over asking price and we had a free lease back for 3 month until our new home was completed. Crazy times. We moved about 20 minutes away to a more rural area but in a new large development. We signed the purchase agreement late last summer and moved in this May. Since we purchased, the price of our model has gone up over $100,000 and our builder told us that some of the features that were included in our home are no longer standard because of the rising cost of materials. In our market (DFW), it looks like the building boom and crazy prices will continue for a while. Not sure about other areas but this can’t go on for too much longer. Supply will eventually have to catch up with demand.

    by LS — July 3, 2021

  2. This is truly a crazy market. Two of my baby boomer siblings sold their FL snowbird homes on the same day they listed them, for more than the asking price! Meanwhile my California daughter is priced out of the market. You can buy a home in LA for less than $2 million, but you might not want to live in it. I feel sorry for first time buyers. Who knows when the market will return to normal.

    by Tony — July 4, 2021

  3. We live in a condo community in Ohio, not exactly a retirement hot spot but homes here are selling quickly and above the asking price . Our town is on the shores of Lake Erie and close to Cleveland Clinic’s West Campus, so in a good market anyway. Recently, our neighbors jumped on the chance to sell their house which sold very quickly and for over asking price. Now they are very unhappy in their rental home just two miles away. Both in their 70’s, they never planned on selling or ever moving to a warmer climate, and they regret not thinking this through long enough since they didn’t actually need the money.

    by Jemmie — July 4, 2021

  4. Jemmie, that’s really unfortunate. We have been considering a sell/buy for years, but there has really been no profit result for us and we can’t find another place that can compare at all to what we have. This present market has great temptations, so we’ve delved again, but this time are have asked 30% more than value. No followup so far. Also we would have to make a good profit and have time to find a suitable replacement where we want.

    Meanwhile, unlike your former neighbors, we’re waiting for a less tricky and volatile market. Our house is not perfect for seniors, but is still a wonderful place to enjoy our senior years. WE are now 73.

    by RichPB — July 5, 2021

  5. Our neighborhood is one where houses rarely go on the market. When they do its at least $50,000 over asking. And the house was priced over accesed value to start with. Sold in 1/2 day!
    Prices are still climbing in Washington& Oregon with no indication of slowing down. In the 5 yrs we have owned our home its almost doubled.
    We are selling next Summer and moving to Ovation 55+ in Pa hrump Nevada.

    by Tomi — July 5, 2021

  6. I’m still working toward buying my first home and it’s difficult to make the commitment and now the housing market is expected to increase but people are still buying homes. When this Pandemic started many people were in a hurry to find some bigger home.

    by Irish — July 7, 2021

  7. It’s so tempting to sell and walk away with a huge amount of cash, especially for those of us who have owned their homes for awhile (30+ years in my case) and have no mortgage. Renting for awhile til the market cools down might be an option, but as Jemmie said, what if we regret our decision. It would be comforting to know that I would have that extra money to leave to my kids. Who knows what to do!

    by Staci — July 9, 2021

  8. Staci, to me, this has all the markings of a covid induced bubble. In a year or two things will settle, though likely not to previous levels — but more stable.

    I agree, so tempting but…

    by RichPB — July 10, 2021

  9. Staci, my thought is if you are happy & content where you are stay. The grass isn’t always greener on the other side & once you make that jump the return may be painful. Something I see & not just here people in retirement are concerned with leaving money to their children. I don’t judge but my thought is I worked hard to be able to enjoy retirement, my husband & I went without early in our marriage bringing up & giving to our family. I tell my son don’t look for me to leave you lots of money I intend to enjoy & do what I want hopefully for a number of years. Hmmm maybe that is why he runs around singing some nursing home song!! Seriously he says enjoy you’ve earned it & we will earn ours!!

    by VTRetiree — July 11, 2021

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