In the beginning of 2020 (pre-COVID-19), the market seemed pretty average and on point with the previous years. The demand was relatively consistent, the supply was in-step with 2019, and both buyers and sellers were preparing for a busy 2020 real estate season.
When the pandemic threw the world into a spiral of uncertainty and isolation, the market was helpless to the impact. In many ways, both buyers and sellers took a hit, but predominately buyers were hit the hardest. We found that the supply of houses for sale plummeted, causing inventory and days-on-market to decline. As the inventory shrunk, the number of buyers did not. In fact, there was an influx of buyers, causing many to lose out by not being able to find their perfect home. It was the peak of a seller’s market and without a doubt, if your house went up, it was going to sell pretty quickly.
As the months went by, the supply started coming back around June, but it still had a lot of catching up to do. As a matter of fact, it is still catching up as we step into this new year. Why is all of this happening? Well, we found that the 2020 real estate market was hit with the perfect storm… when COVID-19 reached the US, it put the market on pause causing there to be a buildup in buyers without homes to buy. On top of that, we are finding the millennial generation taking steps towards investing in real estate which is flooding the market with another generation of buyers. Lastly, with some of the lowest interest rates in years and people shying away from the city because of all of the perks it lost during COVID, people are eager to own their own place in the ‘burbs. This is the current story happening in most towns, but the climate looks fairly different in the luxury market.
So, what does this really mean?
Regardless of your price point, if you have an updated home, modern amenities, and you price it appropriately and accurately, it will sell quickly in this market at premium. 2021 will continue to be a seller’s market and to be frank, if you’ve ever thought about listing your home, now’s the time.
Don’t have an updated home with modern amenities? Check out our compass concierge to learn exactly what steps it takes and how we can help get you there.
What about the Luxury Market?
It’s important to differentiate the market when it comes to the luxury real estate market because it looks vastly different than what we are seeing in the regular market. Sellers in the luxury market are hearing many success stories about so many buyers in the market, but finding this inaccurate when it comes to actually selling their homes.
It’s important to remember the price segment in these situations and the amenities of the home. In the luxury market, we are seeing very contrasting stats to the regular market: cumulative days on market in 2020 was actually HIGHER than 2019 and there was (and still is) an influx in luxury houses for sale which is creating a buyer’s market. The deduction of less property taxes from your annual income than years before is adding to the challenges…We asked local CPA, Dennis Bishop, to shed light on the subject of property tax deduction and how this is impacting peoples’ evaluations to stay in NJ.
“So, this is the S-A-L-T issue… State And Local Taxes. For the 2017 Tax Returns and prior years, all Real Estate Taxes, and all State & Local Taxes were itemized deductions. Starting in 2018, those same deductions were limited to $10,000. So YES, less Property Taxes can be deducted from annual income than in prior years. However, I must point out that there are many other factors when preparing a tax return. For example, a Higher Standard Tax Deduction was also implemented when the SALT limitation was imposed, that may have been beneficial to people with low mortgage interest Expense per year. But overall, states like New Jersey with High Real Estate Taxes were adversely affected by the $10,000 State and Local Tax Limitation which definitely have people looking other than New Jersey and can be best seen when the kids are done with their education.”
Padgett Business Services
If you find yourself looking to list your home in the luxury market, let us walk that journey with you. Stats are helpful when it comes to real estate but understanding how your home fits into the big picture of those numbers and trends takes experience, education, and expert understanding. If you’re ready to list your luxury home in this market, contact us and we will be happy to guide you along the way to success in selling your home.