Are we going to see inventory levels go up in 2021?
And how will this affect the market? In my experience in the industry, I have never seen inventory levels this low, ever. What does this mean for a seller and a buyer? Lower inventory levels cause home prices to go up because buyers are bidding, over the list price. This causes homes to increase to higher levels.
So, it’s great for sellers, but it makes it much more difficult for buyers. Recently, we’ve seen as many as 43 offers on one property, which makes it hard for buyers to have their offer chosen, but allow sellers to choose the terms of the contract that are most favorable to them. Sellers are taking into account factors such as down payment amount, type of loan, appraisal gap, contingencies, etc. when they choose their offer. So, buyers are having to come in as strong as possible with their offers, in order to get their offer accepted.
One of the factors that has led to the lack of inventory is the average age of a homeowner that is about 57 years old. We’ve been told by the health care professionals that the older you are, the more at risk you are for the virus or having very serious complications. So many older Americans have waited to list their homes. We believe that inventory levels are going to go up once people feel more comfortable listing their home because they aren’t fearful of getting sick. Also, CoreLogic predicts that the turnover rate, that’s the percent of houses that will actually sell in 2021, will be higher than the last 20 years on average for turnover rate.
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