That State of Residential Real Estate Spring 2021
For anyone following residential real estate markets, you already know it’s been a robust seller’s market since the beginning of the pandemic last year. And after talking with local real estate experts Tracy Wright and Robbin Edwards—both are agents with local Encore Sotheby’s firms—I feel that it is a safe bet to predict that the local residential market in 2021 will be much of the same.
Wright Gives Sage Advice to New Construction Clients
With the opening of Holliday Farms last year, Zionsville has seen an uptick in new-home construction, and so I asked Wright what her advice is to prospective clients interested in building their next home.
“I also work with new construction [clients],” Wright shared. “Lumber prices, roofing shingles prices, etc., are going up so high. I read that lumber was up 113%, so it’s a challenge for people to build for the same price that they could even a year ago, but the [residential] construction industry is strong, and there’s a lot of people that want to build right now.”
Offering her best advice to people considering building their next home, Wright stated, “My advice would be to interview builders and ask how they are working on keeping up with the estimates in terms of the contract price. Make sure you have a good understanding of ALL your options when it comes to financing the new build and make selections that are timeless. You don’t want to have to update and replace things in the house in five to 10 years.”
Working with a knowledgeable agent to represent you throughout the new-build process has numerous advantages.
“I know people often go straight to the builder and don’t think that they need a [real estate] agent,” Wright said. “I advise people to be as educated as possible, and relying on a real estate agent that’s trained in the new-build world can help you with selections that will be good for resale and can help you navigate through how the construction loan process works.”
Buyers Be Prepared!
Another local market expert, Robbin Edwards, shared her thoughts on the current market and what buyers should know before engaging in the bidding wars on their next home. Per MIBOR, the List to Sale price ratios in January of 2020 were 97.1% and were 98.4% in December of 2020. The average sales price will continue to go up in 2021, and the average days on the market will stay low.
“The end of 2020 finished strong, and we had the best year we’ve ever had,” Edwards said. “And I think the challenge for 2021 is that it’s definitely still a seller’s market. Buyers are paying a premium right now, and not just in new construction but in existing construction as well.”
According to Edwards, home values are up 38% or more from last year, and agents are dealing with multiple offers across all price points. The current inventory is also down 50%, making this current market highly competitive.
“Given the challenges in the market right now with low inventory and a surplus of buyers, both agents and buyers are utilizing tools and strategies that are not typically necessary in a traditional market,” Edwards explained. “First, buyers are waiving inspections, and in certain scenarios, a buyer can waive the appraisal. If the appraisal can’t be waived, then we are including appraisal clauses that stipulate a buyer will bridge a gap between the appraisal and agreed-upon purchase price.”
Edwards shared that another tool agents are using is an escalation clause that allows a buyer to automatically and incrementally increase their offer over the next best offer to a preset maximum or cap.
“These can be beneficial in multiple offer situations, which we find ourselves in more often than not in today’s market,” Edwards said. “While this is an oversimplification, I sometimes liken it to eBay for real estate. There are additional considerations and language that need to be considered when using these to protect buyers, but they can be effective.”
Edwards continued, “For example, a home is listed at $100,000. A buyer is willing to pay $110,000 for the home but does not want to make that the initial offer. Rather, they include the EC that says they will increase their offer in $2,000 increments to a maximum (cap) of $110,000.”
Not Your Typical Market Environment
Zionsville has—historically—been a unique real estate market with regards to how quickly newly listed homes are sold.
“We’re seeing a lot of homes right now that are going on the markets and the [listing] agent already has a buyer in mind,” Wright said. “So, people have to move fast as homes go up in the market. People are already sitting on standby, and it’s a race to the finish. There are only so many homes in each price point, so it’s important to have an agent looking out for you, letting you know right when something goes on the market so that you have a chance at it.”
What makes the Zionsville market even more distinctive is that the local real estate agents work with each other in a collaborative manner.
“In this market, you have to have an agent because there’s no way you’re going to navigate this market as competitive as it is without one,” Edwards advised. “We’ve got a consortium of agents representing all brokerages inside of Zionsville and some from outside, and we are collectively trying to work together to manage some of the craziness of this market, but to some degree, it’s completely out of our control.”
To contact Robin Edwards with the Edwards Realty Group at Encore Sotheby’s International Realty, email her at [email protected], call (317) 508-1806 or visit her website at edwardsrealtygroupzionsville.com.