The past several months have been difficult for all of us, and a lot of small businesses have had a really tough time surviving in the current atmosphere of social distancing and quarantine. Spring doesn’t really matter to many because life has become, well, monotonous. But in the world of real estate, the spring is about more than just warm weather and school ending.
The spring real estate market typically means high inventory and quick sales. Many of my clients have been asking if, although the spring market has hit, should they wait until the COVID-19 era is behind us to move forward with selling or buying a home. What most are shocked to hear is that not only are we experiencing the typical spring market real estate frenzy; the fallout of the coronavirus has set South Carolina’s real estate market on fire. I have been busier over the past couple of weeks than ever expected.
The reasons for the boom are many, including more time on people’s hands to shop around. But I have seen some consistencies in why the real estate industry has not seen the crash that other business sectors have. And all of these reasons combined make right now an excellent time to list or buy your home if you are on the fence.
Historically Low-Interest Rates – Cheap Money
Due to the economic atmosphere, interest rates are historically low. They have been hovering on the low-side for some time. And before COVID-19 some were forecasting that a 4-5% interest rate wouldn’t last much longer and hikes were inevitable. But things have changed. The interest rates for a 30-year mortgage, although varying day to day, is somewhere in the low three percent range.
And shockingly for a 15-year, they are sitting at about 2.6-2.75%. In financing terms, that is almost like free money. So, if you have been considering buying a home, now is the time to take advantage of locking in rates that you will benefit from long after the COVID-19 era is behind us. Where just a few short months ago it looked like renting might be an economically better option, rent prices have skyrocketed! Therefore, it makes no sense not to buy a home with the interest rates being so low – it is just throwing money out the window. Rents are so high that buying makes more sense.
People are Moving Out of Big Cities and Heading South
Even before social distancing, big cities and metropolitan areas in the North were beginning to lose their appeal. The events of the last two months have seen a surge of people moving not just out of cities at a great rate; they are looking for the quaint comfortableness of Southern towns. Due to people rushing to move away from their current high taxes and crowded conditions, South Carolina is experiencing a boom in population.
Summerville is just one of the many small communities that are highly attractive to those looking for a new place to settle. Being close to Charleston, which has all the culture and activity of some cities, Summerville is highly alluring to many who want to leave Chicago and New York but don’t want to be too isolated.
In fact, South Carolina is now the ninth most coveted place to move to in the United States with people flocking not just from the North, but nationwide. The phenomenon of people vacating cities has led to high competition for housing throughout the South. So if you were considering listing, the spring market plus a desire for a small community is leading to more competition, which equals higher real estate home prices.
New Home Building Materials are Scarce
According to recent statistics, nearly one-third of all materials needed to build homes are being affected by COVID-19, because the supply chain to acquire them has been disrupted. The delay in being able to get the things needed for home building continues to be a struggle around the United States.
Also putting a crimp in home building is a lack of property available and the fact that there is a construction labor shortage. But even with struggling conditions, builder confidence is at an all-time high and most are continuing with their home building endeavors. What that means for the average home seller is that new homes will be in short supply.
And, therefore, it will likely push those who were only considering new builds to look elsewhere. That could lead to more competition in housing due to lower inventory and much higher competition. So where once a segment of homebuyers would only consider new; they might start to broaden their horizons.
Many industries have suffered due to COVID-19, even in my own family, things have dramatically changed in all aspects of life, both physically and emotionally. Real estate has changed too, it doesn’t exist in a bubble. But what I see on the front lines is that things are not just chugging along, they are picking up speed.
And when my clients ask me if now is a good time to list or buy, or to hold off, these are the facts that I give them and let them make their own choice. I don’t have a crystal ball, nor can I foresee the future. But what I do see right now is that if you are in the market to buy, money is cheap! And if you are in the market to sell, South Carolina is looking super attractive to millions. So it is ultimately your choice – just remember that I am here to help guide you through whatever decision you ultimately make! We are in this together.