• Mike Gratland

With The 2021 Skyrocketing Home Prices, Is it A Good Time To Buy?

Updated: Apr 16


Across the country housing inventory is at an all-time low. At the same time, buyer demand remains strong. The nation is seeing a low 1- 2 month supply of inventory. Locally in the Conejo Valley, we're seeing inventory as low as 11 days for homes under $1,000,000!

Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, anything under 4 months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly. In December 2020, the months’ supply was at a historic low of 1.9 months, meaning that at the current sales pace it would take just 1.9 months for housing inventory to be depleted. This is down from the 2.3-month figure recorded the month prior (November 2020), and from the 3-month figure a year earlier in December 2019.

Whenever there’s a shortage in the supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. As a result, home values are surging.

This is great news if you’re planning to sell your house. On the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. Purchasers, however, should realize that the price of a house is not as important as the monthly cost.

There are several factors that influence the cost of a home. Two of the major ones are:

  1. The price of the home

  2. The mortgage rate at which a buyer can borrow the funds necessary to purchase the home


The blue bar represents today’s affordability. We can see that homes are more affordable now than they were from:

  • 1990 to 2008

  • 2017 to 2018

Buying a home today is just a little less affordable than it was last year, but still very affordable compared to historical housing market trends.

Note: During the housing crash from 2009 to 2015, distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

Why are homes still affordable today?

The number one factor impacting today’s home buying affordability is record-low mortgage rates. There’s no doubt that prices are on the rise. However, mortgage rates have fallen dramatically. At the close of 2020, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.72%. The average rate was 3.68% in 1999.

If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

At this point, home purchase affordability is still in a historically good place. However, we need to watch price increases going forward.






If you would like to know what your home would sell for today or know someone who is thinking about it… let me know!


And if you are in need of assistance with buying a home...



We are here for you!







There Is A Better Way To Sell Real Estate.

 

We Sell Homes In 72 Hours

Netting Our Clients Thousands More!

 

Our "Auction-like" program has a proven track record yielding our clients more money for their homes.

see what our clients say

Every home is properly evaluated, and provided with best photography, quality print materials and compelling digital ads.

You can be sure your home will get the best exposure with our Century 21 world wide syndicated network

Work with award winning real estate agent Mike Gratland in these

Greater Los angeles areas:

Best Real Estate Service in Ventura County Cites:

real estate service areas by zip code:

91320, 91360, 91361, 91362, 93001, 93003, 93004, 90265, 91301, 91302, 91304, 91307, 93010, 93012, 91311, 93021, 93022, 93023, 93030, 93033, 93036, 93060, 93061, 93065, 93066

Office:

4165 E Thousand Oaks Blvd Suite 100

Westlake Village Ca 91362

cell: 805-857-5811

email: mikegratland@gmail.com

72soldbkgrnd_houses_CMYK-01.jpg

DRE Lic#01263457

72HourSOLD | Realtor Mike Gratalnd