For the first four months of the pandemic (March 2020 through June 2020), the real estate market regionally contracted significantly, with the number of new listings down roughly 40% from the same period the year before. Mostly, it was already vacant houses coming on the market; people who’d have needed to still be living in their house while it was listed for sale decided to hold off due to concerns about the virus and house showings. And, there weren’t as many buyers either; a lot of people weren’t confident they’d still have a job in a few months or not be seriously affected some other way by the pandemic.
More critically, during that initial period, supply dropped more than demand. With there being more buyers than sellers, we began to see a hint of what was to come — and what has continued since — heightened competition among buyers, which, over time, increasingly resulted in multiple offers, the use of aggressive escalation clauses, and buyers willing to forego home inspections (or, having a “pre-offer home inspection” completed before submitting an offer).
It’s important to note the market for condos across the US was affected differently than for single family homes and townhouses. For the first year of the pandemic, condo values dropped and condos were often much harder to sell. Out of concern for the virus, many people didn’t want to move to a condo or apartment building. And, many of those living in a condo or apartment wanted a single-family home or townhouse instead, which often meant trying to buy in the suburbs.
The market for condos has largely recovered. At the same time, the regional market for single-family homes and townhouses has, across the last 18 months, oscillated between being hot and white hot, with sale prices continuing to go up.
In the last two years, in the West End in Rockville, the neighborhood I live in — which has been a destination of choice for the last two years, particularly for people wanting to move from condos and apartments — house values have increased at least 15% to 20% or more. And, all of us in the West End have seen this at least partially reflected in the new property tax assessments we recently received, effective January 1, 2022.
Will the hot real estate market continue? I’m guessing we’re on the cusp of the real estate market cooling some (and moving in the direction of equilibrium), largely as a result of higher mortgage rates, which will lower how much prospective home buyers can borrow and pay. As of when I’m writing this, 30-year fixed rate mortgages now average nearly 5%, the highest in three-and-half years, and up from around 2.8% only eight months ago. Many analysts now expect mortgage rates will trend even higher.
(I show current mortgage rates here: https://www.larrygiammo.com/mortgage-rates-and-news/.)
That said, anyone looking to sell their home in the next six to twelve months should still do well, relative to what their home would have sold for more than two years ago. And, so long as your house is in good condition, and priced reasonably (based on the most recent comparables), you should still expect to be able to get your house under contract within only a week or two.