Published on November 05, 2020
Written by The Servion Group
According to Danielle Hale, chief economist at Realtor.com, the national median sales price in September 2020 was 11.1 percent higher than a year ago and the supply of homes was 39 percent lower. In an interview with Barron's, Hale said, "In many ways, the housing market is behaving as if it's still summer."
One of the biggest factors at play, Hale said, is that the housing season got off to a delayed start due to the onset of the coronavirus pandemic. The virus essentially froze the normally busy spring real estate market, and buyer activity then skyrocketed in late spring and through the summer, spurred on in part by record low interest rates.
Additional factors in this year's unusual fall market include, Hale says:
In fact, our own real estate brokerage, Servion Realty, is running into all of these factors this fall. Our broker, Chris Nowak, says he recently was involved in a deal where a home was listed for $199,000 and the seller's eventually accepted an offer of $211,000. The home then appraised for just $200,000, which meant the buyer had to come up with cash to make up the difference between the appraised value and the selling price. That's obviously a less than ideal scenario for the buyer.
Well, the answer, as usual, is "it depends." "If you are a buyer shopping for a home, it kind of depends on what factors you are trying to optimize," economist Hale says.
She and her colleagues believe that listings and availability will increase, but not until February and March, when the traditional home buying season begins. That means that even though prices right now are rather high, people looking to make a move this fall may indeed want to pull the trigger, because it is unlikely that there will be price relief even if listings increase, as prices typically pick up in February.
"Even though we're seeing price increases right now, they may not necessarily slow down much in the future," Hale said.
Increased prices and more competition are certainly tough for buyers, but there are still some advantages for those who do decide to make the purchase.
Mortgage interest is tax deductible. And property taxes are deductible up to a maximum of $10,000. So if you are able to itemize your tax deductions and you buy a home in the fall, that could give you a couple of months’ worth of home-related deductions at tax time.
Fall is when furniture, appliances, flooring and other major items often go on sale as manufacturers prepare for the holidays and the rollout of next year’s products. That means there’s no better time than the fall to outfit your new house with everything you need to make it your home.