According to Dr. Lawrence Yun, chief economist and senior vice president of research with the National Association of Realtors, of the Top 10 prospective markets in post-COVID 2021 and 2022, Phoenix tops the list, with a whopping 10% increase in population for 2021.
Close behind are Austin, Charlotte, Atlanta, Houston, Denver and Nashville. Dr. Yun also notes that nationally in 2020, our unemployment was 6.9%, and predicts a reduction of that rate to 6.2 and 5.0 in 2021 and 2022, respectively. Gross Domestic Product (GDP) growth was actually negative, at -2.7% in 2020, but a 3.5% increase in GDP is expected in 2021. Although 30-year fixed mortgage rates of 2.83% are expected to go up, that rise in 2021 and 2022 should be a gentle uptick to 3% in 2021 and 3.25% in 2022.
In Flagstaff, real estate inventory continues to be very low. More buyers and not enough homes for sale perpetuates our seller’s market. If you are a seller, here are some points to consider:
Listen to your trusted realtor regarding competitive pricing of your home. Remember that most buyers, even those who can afford to pay cash, will get a loan because the rates are so low. In most instances, lenders require home appraisals. If you price your property at an inflated price, your property may not appraise for value, and the buyer may cancel the contract. When you do list, you may receive multiple offers for your property if it’s competitively priced in a desirable area and in good order. Ask your realtor to give his or her opinion of the offers. Your realtor may know the buyer’s lender or call the buyer’s agent to learn more about your potential for a successful close, in order to help you make the best decision for you. If all goes well, you could have a great contract with a well-qualified buyer and a backup offer in the wings.
If you are a buyer, why not do some prep work to improve your odds in this competitive market while you are waiting for your perfect house to hit the MLS? Consider asking your local lender for not only a prequalification letter, but also a preapproval letter. A prequalification letter is a statement from your lender, who has checked your credit score and believes you can probably get a loan with his or her mortgage company. A preapproval goes one step further in that financial information has been submitted and verified by your lender. Now may be a good time to prepare yourself to consider an offer over the listing price to get the seller’s acceptance of your offer. For example, if your price range is up to $650,000, ask your lender to plot out your projected increase in monthly mortgage payments if you need and want to go higher to get an accepted contract. This way you can comfortably make the best possible offer by knowing in advance, versus blindly offering in the heat of the moment after you see “The House.”
Imagine, at last, you see that perfect house on the MLS. You view the house with your realtor the same day and you want to write an offer. Your realtor likely will call the list agent representing the seller and ask what terms and closing date would make your offer most competitive and also find out if the seller has received offers and when they plan to respond to offers.
Work with your lender and realtor team to consider escalation clauses of the purchase price or even appraisal waivers. In a typical market, these options don’t see the light of day, but as you all know, these are not typical times. Get the best information you can from your team and act decisively.
Happy New Year to us all! FBN
By Paula Mack
Paula Mack is a long-time Flagstaff resident and sales agent with Russ Lyon Sotheby’s International Realty. She can be reached at firstname.lastname@example.org or 928-699-6837.