The State of the Real Estate Market- January 2021

There's no arguing that COVID-19 lit a fuse to the powder keg that was the already decreasing real estate inventory in Hillsborough county. But now that we're turning the corner on the pandemic, where does that leave the real estate market? 

What is a Balanced Real Estate Market?

Before discussing the significance of the current market stats, we need to first talk about the real estate market at the 100,000 ft view. An "ideal" market, not a buyer's nor seller's market, is known as balanced. Buyer demand matches home supply. In a balanced market, buyers can submit reasonable offers, sellers will accept them, and home values rise steadily. Whether the market leans towards buyers or sellers is judged by MOI or Months of Inventory. MOI measures how long the current inventory of homes for sale would take to sell if no other homes came on the market after today. The sweet spot of 5.5 months is considered a balanced market. A higher MOI means more of a buyer's market, lower a seller's market.

​Hillsborough County Historical Trends

 Except for an upward trend in 2018, Hillsborough County's real estate market has seen decreasing MOI over the last six years. MOI was down to 3.5 months in January of 2020 from 4.5 in January of 2016. What does this mean? Remember, the sweet spot for a balanced market is 5.5 MOI which means supply issues existed BEFORE the pandemic hit. 

Then came 2020.

The first part of the year saw inventory remain steady as we all adjusted to our new way of life. As more people began working remotely, their housing needs shifted. Buyers started looking for single-family homes with more space. Proximity to work and commute times lost their importance. Mortgage rates dropped to historic lows, and buyer demand jumped to all-time highs. 
With the reduction of interest rates, many homeowners opted to refinance their loans and stay in their homes. And with virtual work environments popping up in every industry, career-related relocations dropped. Safety concerns also prompted homeowners to wait before listing. The prospect of opening their homes to countless strangers for showings and inspections, and possibly contracting the virus, kept many of those doors closed. 
All of this made the shortage of homes on the market even worse.

​January 2021 vs. January 2020

The number of active listings in Hillsborough County is down 56% from January 2020 listings. 

The length of time a home is active on the market is down 67%, from 30 days to just ten days.

The median list price is up 16%.

The number of closed sales is up 18%.

And the big one, MOI, is down 63% to only 1.3 Months of Inventory.

​So What Should We Expect?

There's no quick solution to the supply problem. Policies at the federal and state level, employment rates, and economic rebound will determine where the market goes from here. A boom of new construction and pandemic-related delays has caused shortages and price hikes in building materials like lumber and windows. 

Mortgage delinquency rates in Hillsborough County are down in January 2021, which is good news. Plus, with home prices so high, homeowners facing foreclosure can sell their homes, pay mortgages owed, and save their credit, all with the potential to make money at the end of the day.

Once the accepted timetable was to list a home 60-90 days before the expected move date. With homes selling so quickly, that timetable has shortened significantly. Many homeowners fear being displaced should their home contract too soon and are holding off on listing until closer to move dates. Typically, spring and summer are real estate's busiest months, and this year is already shaping up to be the same. Team Eaton agents talk to home sellers daily, and some are choosing to wait until April/May before listing their homes.

If you're a buyer:
The next three months should start looking up when it comes to supply levels. But we can not stress enough the importance of defining your needs vs. wants as competition will stay high and homes will continue moving quickly. Jumping on the first home that comes along is tempting, but don't waive your right to due diligence. A home is a long-term investment and the largest purchase you will make. Don't let the current market frenzy rush you into a decision you will regret down the road.

If you're a seller: 
There's no arguing that this is your market but don't get ahead of yourself. The homes that are selling the fastest and for the highest price are the ones that are in good repair, clean, and priced right from the start. You can't just slap a home on the MLS with an inflated price and expect to make it to closing. Homes still need to meet appraisal requirements, and lenders' standards haven't changed. Set yourself up for success by making sure you prepare your home before hitting the market.

No matter your real estate journey, always make sure you have a trusted REALTOR in your corner. When it comes to keeping a transaction on track, you need someone knowledgeable that will be proactive instead of reactive. In such a fast-paced environment, avoiding costly mistakes takes expertise. The right REALTOR should have a sterling reputation, continually learn and adapt, and always keep their client's interests above everything else. Now more than ever, integrity should be the top priority. If you're ready to talk to a REALTOR about your needs, a member of Team Eaton is prepared to help. Contact us today to get started.