First --- Happy Thanksgiving! Okay, looking at the market I can tell you the following:
Pending Sales (under contract but not yet sold) continue to outpace New Listings coming on the market. This is generally a good thing for seller’s because it means that inventory remains tight with limited options for buyers.
Getting deals to close can be tricky. We are seeing across the board that more and more deals are falling apart during the closing process. Issues undermining sales are:
- Appraisals – Appraisers are very backed up which means it is taking extra time to get the appraisal and that can cause closing to require extensions. In addition, appraisals are often come in low. This is typical in markets with quickly increasing prices because appraisals are a lagging indicator.
- Inspections and repairs – while we are seeing mostly normal things in inspection reports, Sellers are having a tough time finding qualified vendors to give estimates and/or actually do the repairs. Like with the appraisal issues, this often can require closings to be extended.
Other Issues At Play
Covid. Many parts of the country are experiencing outbreaks of Covid. How this impacts our area remains to be seen but I am confident there will be some impact. As of now, rental calendars seem to be filling up nicely and barring some unforeseen issue I would expect 2021 to be a very, good year for investors looking for high rental income. High rental income generally leads to higher sales prices so we will continue to monitor this closely.
Financing: It appears the Freddie Mac and Fannie Mae will be backing away from buying back condo loans from banks and mortgage brokers starting Dec. 7. This will constrict the number of lenders in the market writing mortgages for condos and when money supply gets tighter that generally leads fewer buyers and ultimately to price softening. The good news is that mortgage rates are still incredibly low right now and that is great news for both buyers and sellers. Because financing is so important, it is something that we will continue to watch for you.
Politics. We may have a new President soon and perhaps even a new Senate. Like with Covid, how this impacts real estate at the beach remains to be seen but I am confident there will be some impact. Capital Gains Taxes, 1031 Exchange Benefit, Travel Restrictions, Economy, Unemployment … and more. There are a lot of balls up in the air right now that can and most likely will have an impact on investors who own real estate at the beach so we will definitely continue to watch this as it becomes more clear.
Summary: As always, we are in interesting times. There are many really, really good things happening for both buyers and sellers, but deals are not easy to get together right now and they certainly are much harder to keep together. If you are considering buying or selling a place here at the beach, you may want to do yourself a favor and make sure you hire a Realtor (us or someone else) with a long track record of success – especially in challenging times like we are in right now. Rough seas require a good Capitan.