Now that School’s Out for Summer we can take a moment to breathe and reflect on the craziest River Valley real estate market EVER. Yes, it’s been a wild ride, but things are definitely starting to shift. Here’s what we know halfway through the year.

Starting back in November 2020 all the way through May 2021 we had the hottest and most competitive real estate market I have ever been a part of in my 30 years in real estate. I’ve worked through the ups and downs of past markets, but this was different.

It became normal to have back-to-back showings at one home, for sellers to receive more than 8 offers on listings, for offers to be 10-20% over the list price when they used to be 0% over, and for almost every term to be written in favor of the seller. Things I’d never recommend were suddenly commonplace: no option period at all, waiving finance contingencies, no-cost delayed occupancy to the sellers, and on and on.

The demand for homes seemed to be never-ending. Sellers were happy. Buyers were discouraged. Inexperienced Realtors were exhausted.

The statistics from the Russellville Board of Realtors support what we felt on the ground. In 2019-May of 2020, the median sold price was $135,301. By the end of May 2021, the median price has jumped to $158,708. That’s a 17.3% increase in median price in the last year. Real estate is driven by supply and demand, and this year demand far outpaces supply.

Such a rapid rise in home prices is not without consequences. The River Valley’s local buyers have been priced out of the market by cash offers from out-of-state buyers. People want to sell but are finding that they have nowhere they can afford to move to…

As the school year wound down at the end of May, we started to experience a notable change in market conditions. No, prices aren’t going down (more on that in a bit), but we are seeing homes are getting fewer showings and there are way fewer offers coming in.

We’ve even seen other agents reduce the price on their listings, which is something we haven’t seen all year. We’ve seen homes come off the market without being sold. We’ve seen fewer buyers offering seller favors.

What is Causing the Real Estate Market to Slow?

1. Summer break. As travel restrictions ease, people are focused on taking a much-needed vacation.

2. The exodus from California and New York is slowing. We saw a huge surge in migration from California and New York as folks sought more affordable areas to live in with less density. As those states open back up and people return to a more traditional work environment, the migration has slowed.

Will We Ever See “Normal” Again?

That’s hard to say… Housing inventory will play a big role in how things develop going forward. In a balanced real estate market, we should have about six months of housing inventory or around 400– 500 homes for sale in Russellville. This year our housing shortage is the worst I’ve ever sent it.

Consider:

• During late 2020-2021, Russellville has only had 30-60 homes for sale at any given time

• To get back to our 2012 to 2019 version of a ‘hot’ market we need to have 250 – 300 homes on the market.

• In order to shift to a buyers’ market, we need 200+ homes on the market. That’s roughly 8x what we have now.

What Does All This Mean for You?

IF YOU ARE A BUYER: While prices have gone up quite a bit, now is the best time we’ve seen all year to enter the real estate market and make a home purchase. There’s less competition, prices aren’t going as high over list, and there are finally more homes coming on the market so you have more choices. I feel pretty comfortable that we have many good years ahead of us as long as intreset rates stay low.

IF YOU ARE A SELLER: We almost always encourage sellers to hold their real estate investments as long as they can. That said, if you were considering making a move in the next year or so, this is a good time to do it while prices are peaking. While it’s not the frenzy it was a month or two ago, homes are still selling quickly. Just be prepared to sell at or closer to your list price than you might expect.

Also, make sure you maximize the opportunity that’s before you. We have seen some social media posts where other Realtors are suggesting that sellers don’t have to fix up their home to sell it. While that is technically true, you’ll make far more money if you invest a little in making sure your home is move-in ready (paint or staging, for example) and shows well in the listing photos. Buyers are willing to pay a premium for homes that are updated so they can move right in and get on with their lives.

If you need money to get your home ready to go on the market, our 5K for Upgrades program is a great solution. We can help you get the money you need for the fix-up, and the cost comes out of your proceeds at closing; no interest.