The pandemic changed the way we do so many things in life. From eating dinner to going to work, we’ve learned to adjust to a new way of life. Another thing that was impacted by COVID-19 is the housing market.
A combination of factors has created an interesting housing market right now. If you’re looking to sell your home, you’re in luck. You’ll be significantly better off. If you’re looking for Birmingham homes for sale right now, you may notice things have been a little bit more difficult than in years past. Here is a quick overview of what’s going on with the housing market in Alabama.
Now is a great time to sell your home, but only if you have a place to go. Rising housing prices mean a bigger payday for you and your family. The cost of Alabama homes is currently at a record high, increasing over 11% from early 2020. Even in Alabama, where housing is usually quite affordable, you can expect to pay thousands above the asking price.
Lack of Inventory
As the pandemic carried on through 2020, the number of houses on the market fell. In Alabama, the number just keeps on falling. In fact, there are about a quarter fewer homes on the market now than there were last year. And, because there are fewer homes for sale, there is a ton of competition. Offering tens of thousands over asking price, waiving inspections or appraisals, or making a cash offer are some of the ways buyers are dealing with the aggressive market. Homes are spending a record low time on the market, so if you’re looking for a new home, you have to be ready to go quickly and you must be willing to make some concessions along the way.
The big question is, how did the pandemic affect the market this much? There are a few answers to that. One, working from home became a much bigger deal during the last two years, and there is no end in sight. Many employers are opting to continue work from home options or hybrid options for employees, which can often be a money-saver for companies. Because of that, people are spending much more time at home and maybe looking to upgrade their spaces.
Second, interest rates for mortgages have hit record lows in 2020, and while they’re on the rise again, they’re still much lower than they were even two or three years ago. Mortgage rates dropped during the pandemic primarily because of federal funds rate cuts, making it cheaper to borrow money and helping struggling Americans laid off from their jobs.
Finally, while many lost their jobs during the pandemic, the average amount of disposable income per person has risen since COVID-19 hit us, likely due to higher unemployment, stimulus money, and the job market has to adjust pay to keep good workers. Many are choosing to put that money into a smart investment — real estate.
While we don’t know what’s in store for Alabama’s housing market, we can make some educated predictions, and it does already look like the Alabama market is leveling out a bit. If you’re looking to sell, it’s time to get in right now before inventory increases and sellers don’t have as much of an edge. If you’re a buyer, you may be paying higher interest rates in the near future, but it may be worth the amount you’ll save on your home. While many experts will disagree on whether the housing market bubble will burst in 2022 or not, what we have learned is just how unpredictable life can be.