Thursday, April 8, 2021 / by Eric Aubrey (Wroblewski)
The COVID-19 pandemic made 2020 one of the most deadly and challenging years in our lifetime. Thankfully, the availability of vaccines has begun to provide hope of returning to some version of normalcy. As we move in that direction, many across the country have been considering whether this is a good time to buy or sell a home. Sometimes the most challenging of times presents the most unique opportunities. We’ll explain.
While attempting to keep our families healthy, the concerns of normal life have not gone away. The bills don’t stop, nor concerns about 401Ks, investments, job, retirement, and markets stability. Thankfully, real estate values have not been something to worry about. In 2020, especially the last half of the year, buyer demand for homes remained incredibly strong, fueled by record-low mortgage rates.
Perhaps because we were home-bound, many of us began to really think more about where we live. If I can work from home… where might I want “home” to be? (BTW… that answer is easy if you live in Naples, Florida!)
According to Zillow, U.S. home prices have doubled in the last decade. As an example, in 2010, the average price of a home in Denver, Colorado was $246,680, while in 2020, it was $464,068. In a report from the Federal Housing Finance Agency, U.S. home prices rose 7.8% from the third quarter of 2019 to the third quarter of 2020 - the fastest year-over-year climb since 2006.
Here’s what Adam Contos, CEO of RE/MAX Holdings, Inc. had to say in the January 2021 RE/MAX Housing Report:
"January home sales started the year off with a bang despite the current shortage of homes for sale. January's year-over-year sales increase was solid by any objective measure, and it signals that 2021 could be a historically good year for housing. Uncommonly low-interest rates, the ascent of the millennial homeowner, and the prospect of working from anywhere are converging to shape a housing market unlike any other.”
While mortgage rates have begun to inch up (a 30-year fixed-rate mortgage is still hovering around 3%), Federal Reserve Chairman Jerome Powell recently told Congress that the central bank will not start raising interest rates until it believes its goals on maximum employment and inflation have been reached.
Investing in real estate is an ideal way to diversify an investment portfolio, reduce risks, and maximize returns. Another advantage over other investment alternatives is taxes after selling the investment. Selling stocks typically results in capital gains taxes, where real estate capital gains can be deferred if another property is purchased after the sale (called a 1031exchange in the tax code).
Is now a good time to buy or sell my home? Yes - now may be the ideal time for home buyers and sellers to take advantage of favorable market conditions.
If you’re considering buying or selling your home, contact us now. The Key Team in Naples, Florida will help you find the perfect property - the perfect buyer - or both!