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.