Reading-Berks Real Estate ~ A Look Back at 2020
It is that time again - A new year is upon us, so we reflect on the year that was 2020 and see what it can teach us about 2021 and beyond. Without further adieu, let's have a look at the numbers.
Available Homes For Sale (Inventory)
To have a housing market, you need houses that are for sale. Over the past several years, the inventory of available homes for sale has crept ever lower. In 2020, 6,056 homes hit the market, which was less than the 6,450 listed for sale in 2019. The low volume of listings paired with high demand forced home values to climb.
According to Bright MLS statistics, there are only 440 homes listed for sale as of this article's writing. Adding to the low inventory issue is a lack of newly developed land in the Reading-Berks area. If the inventory remains at historic lows and demand continues at the current pace, we can expect home values to continue to rise in 2021.
Homes Sold in 2020
The Reading-Berks area saw 5,379 homes sold in 2020, only two off the 2019 pace of 5,381. Even though we had 394 fewer homes listed in 2020, the sales numbers were almost identical year over year. The median home price in 2020 was a whopping $190,000 compared to $172,000 in 2019, a rise of 10.4%. The equation is simple - fewer homes for sale + more demand = higher home prices.
The demand for homes was boosted by historically low-interest rates and the availability of mortgage money. It looks like interest rates will continue to be lower through 2021, according to the fed, which will likely keep home buying interest rising.
A Closer Look At The Sold Numbers
Often I am asked how the real estate market is? Even though median home prices are up, it does not tell the whole story. Let's have a look at segments of the local housing market.
2020 Homes Sold Below Median $1,000 to $100,000: 794 units sold at a median price of $69,900 - 956 units sold at a median price of $65,000 in 2019 - 7.5% price increase year over year.
2020 Homes Sold At Median $101,000 to $300,000: 3,656 units sold at a median price of $187,125 - 3,786 units sold at a median price of $179,900 in 2019 - 4% price increase year over year.
2020 Homes Sold At Double Median $301,000 to $500,000: 796 units sold at a median price of $359,900 - 571 units sold at a median price of $355,000 in 2019 - 1.4% price increase year over year.
2020 Homes Sold At Triple Median $501,000 to UNLIMITED: 128 units sold at a median price of $618,000 - 63 units sold at a median price of $635,000 in 2019 - 2.7% price DECREASE year over year.
It is hard to paint the whole real estate market with the same brush. Even though there were more home sales in the upper price range, the value dropped from 2019.
Things To Consider in 2021
If you are thinking about selling your home in 2021, the good news is that if economics stay as they are (and that is likely), the year should result in higher property values consistent with the percentages above. If your home is in the double or triple median price range, take a good look at your property taxes, watch what happens with the Common Level ratio, and make adjustments when possible. You can call me for more details regarding this strategy.
If you are buying a home, the low inventory will not be your friend as you may still have to chase home values higher. If interest rates remain low or go even lower, it could make that pill easier to swallow to get the home you want.
One thing to watch out for would be any signs of inflation. Depending on what news you read, between 20 and 25 percent of all money in existence was created in 2020. There has been lots of capital injected into the economy to prop things up. There is concern that this practice could heat inflation, which would cause interest rates to rise. That would be very counterproductive to the housing market and the economy in general.
Knowledge is Power!
Happy New Year!
Jeffrey C. Hogue