Hopefully your summer is off to a great start making up for last year’s subdued season.
The housing market is certainly going full steam ahead as the summer progresses.
The latest National Association of Realtors (NAR) Existing Home Sales Report for June was just released and after four month-over-month declines in sales, we are once again moving in an upward fashion, with national home sales on the rise by 1.3% over last month. Nationally, we are now on pace for there to be 5.86 million home sales in 2021 which is a 22.9% increase over last year’s rate.
In another major development, the national median home sales price was a record $363,300, continuing the trend of double-digit year-over-year price increases. Prices are up 23.4% over this time last year.
The two major drivers of increased prices are supply and demand. Obviously buyers are active with robust sales. But at the same time, the number of homes on the market nationally is just 1.25 million, a drop of 18.8% over last June. The good news is that June in the U.S. saw a 3.3% increase of inventory over May. We are all hopeful that this trend continues. Currently, there is only a 2.6-month supply of available homes, well below the 6-month mark that indicates a balanced market. For now, sellers continue to hold the negotiating power in this “seller’s market.”
With near record low inventory, it is not a surprise that homes are still flying off the market in an unbelievable average of 17 days on market. Nationally, 89% of homes sold in June 2021 were on the market for less than a month.
Let’s discuss what’s happening here at home. The great news is that compared to the national median sales price of $363,000, homes in our market are much more affordable. $171,000 more affordable!
In St. Joseph County, the median sales price in June was $192,000, up 20.6% from this time last year! And just like we are seeing nationally, the price increase is driven by the supply vs. demand imbalance. While the pace of home sales is up 23% over last year, the number of homes available is down 26.4% to an incredibly low 1-month supply
As you would expect, we are continuing to see a large number of multiple bids on a listed home. Let me explain how the “list to sales” ratio shows how market conditions may impact sales price. We want the number to be as close to 100% as possible where the agent and seller have priced the house perfectly to what the market will bear. Historically, we usually see a ratio hovers around 97%. This means that a home listed at $200,000 would expect to sell at $194,000. But in today’s heated market, homes in our markets are generally selling several percentage points above that historical average. In June, homes in St. Joesph County sold at an average of 102% of the list price!
This means that we are seeing many homes selling OVER asking price, which is again, great news for sellers. That $200,000 home would now likely sell at $204,000.
For homeowners, this creates a significant bump in equity and appreciation! And for buyers, I think it is important to remember that you likely will not need a full 20% down payment to qualify for a mortgage and the historically low mortgage rates are allowing you to buy “more home” for the money. And because we live in one of the most affordable places in the nation – and South Bend is the most affordable major college town in the nation – hopefully you will not be priced out.
And buyers also can trade “price for commute.” This is an old real estate term that allows us to recognize we can move further away from a desired location in order to save some money on a home.
I hope you are enjoying your summer as well as the red-hot market conditions here in northern Indiana. Reach out to me email@example.com or call us at 574-360-2569 with any questions.
Until next month!