How long will this competitive sellers market actually last?

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sellers market, two experts
Jim Bryant and Richard Grimes out at RealtySouth’s new Blue Lake HQ. Photo via Sharron Swain for Bham Now

We’ve been watching the Birmingham housing market for a while. Curious about how long this crazy sellers market will last, we reached out to two local experts: Richard Grimes, President and CEO of RealtySouth, and Jim Bryant, Mortgage Consultant with Prosperity Home Mortgage. Keep reading to find out what they said.

Bham Now: how long have we been in this sellers market + what prompted it?

graph of average days on the market and median sales price, sellers market
Average days on market has gone down while median sales price has gone up. Data for Birmingham metro, year-over-year from May 2011 to May 2021. Graphic via Alabama Center for Real Estate (ACRE)

Grimes: It’s been going on throughout 2020 and 2021, and a combination of things have caused it:

  • Low interest rates.
  • Exaggerated demand for houses with people working from home because of COVID and investing in both their primary residences and in second homes.
  • Low supply.
graph of 30-year fixed rate mortgage average in the us
This chart shows how mortgage rates have trended downward steadily since 1981. Graphic via Freddie Mac

Bryant: With Americans sitting in their houses for a year and a half, and with government stimulus money, many people have saved money.

Forbearances for student loan debt mean that some people haven’t paid this debt in a year and a half. In some cases, they haven’t paid mortgages or rent for about this same length of time. As a result, people are sitting on a massive amount of cash.

Because of that, people who in the past wouldn’t have considered buying a home feel that now’s the time to do it, and they’re entering the market. There’s a much higher demand than I’ve seen in 20 years of doing this.

If you’re thinking of buying a home now, Prosperity Home Mortgage can help.

Bham Now: how long do you think the sellers market will last and what indicators are you watching?

Housing inventory months of supply
Low inventory is one of the drivers behind the current sellers market. Graphic via Alabama Center for Real Estate (ACRE)

Grimes: If we look at the next 18 months, I don’t see a dramatic shift in interest rates, although they will likely go up some. I don’t see a shift in more available inventory.

So I think we’re in a similar market for the next 12 to 18 months at least. And we can’t predict further than that.

Bham Now: Both Grimes and Bryant cited a number of indicators they watch, to see what the market’s going to do:

Bham Now: let’s say someone does decide they’d like to buy right now. What advice do you have for them?

Birmingham residential sales and inventory
The red shows sales while the grey line shows inventory. Graphic via Alabama Center for Real Estate (ACRE)

Grimes: If you have a house to sell, you can find a new home to live in. But you’ve got to be a more prepared purchaser.

A normal purchaser is going to get a mortgage—typically a 30-year mortgage—and we like to pre-qualify and pre-underwrite them for that. That way, they are competing head-to-head with a cash buyer, and their financing is done.

A good buyer’s agent is going to prepare the buyer financially before they even start looking for a house.

Bryant: Get your credit right. The higher your credit score, the better your mortgage rate. The better your rate, the lower your monthly payment. A lower monthly payment means more house for your money.

Next, let’s talk about down payment. There’s a misconception that you have to have 20% down to buy a home. There are a variety of zero-down programs in this state.

And, most Americans are able to buy their house with a down payment as low as 3%. On a $300,000 home, that works out at nine grand, which is roughly what the stimulus checks were for the average family last year.

If you have credit and a down payment, we can help you with the rest.

The important thing, if you’re looking to get a home, is to go to somebody you trust. I live right here in this community. My family goes to school here. We go to church here. With a local lender, you can literally reach out and touch them.

In such a competitive buyers market, having all your financing squared away is an absolute must. If you’re wanting to buy a home right now, reach out to Jim Bryant or another lender at Prosperity Home Mortgage today.

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