Buying a home in Frederick County right now is entirely different than it was a few months ago — and not just because of masked and social-distanced house tours.
Low interest rates have enticed potential homeowners to purchase, but they are struggling to close on the perfect house for the perfect price, as an influx of buyers try to outbid each other on a limited number of properties.
In a typical July, there would be between 1,100 and 1,200 homes on the market in Frederick County, Wayne Six, co-owner of Six, McClain & Associates, said.
But as of Thursday, there are only 530 houses for sale in the county.
It’s a recipe for disaster for homebuyers, but a recipe for success for sellers.
Six likes to look at the housing market as if it were a see-saw. When there are an average of 1,100 or so houses for sale, it puts the see-saw at equilibrium.
“That means there’s no advantage to the buyer, no advantage to the seller. It’s a fair, evenly balanced market,” he said. “COVID has altered the market so it’s not balanced anymore. It’s tilted totally in favor of the seller.”
When demand is up and inventory is down, as in any market, prices surge.
According to data provided by broker Dan Plombon of Mackintosh Realtors, the total sold dollar volume increased 23 percent from last year to this year, and the average price of a sold house in Frederick County increased by 7 percent. Meanwhile, inventory in the county dropped 46 percent year-over-year.
“Our company had a property that was listed late last week and within two days there were over 40 potential buyers that viewed the property with agents,” Plombon said. “And again within that time period there were 18 offers that were submitted just on that one property. So it’s kind of crazy.”
Of the 472 Frederick County houses sold in June, 226 of them sold in between one and 10 days.
There could be a multitude of reasons inventory is down, but lack of new construction is not one of them, said Amanda Addington, president of the Frederick County Association of Realtors. New construction numbers are holding similar to last year. Resales, however, have dropped significantly.
“I think probably uncertainty does play a role in that as well, uncertainty with regard to everything that’s going on with the pandemic,” Addington said. “And also because we are in an election year, and we always see some type of uncertainty with regards to that.”
Others simply might not want people walking through their house to tour it during a pandemic, even with safety measures in place.
“Now, my take on it is I think there are still sellers out there who maybe would have planned to put their house on the market in say, March or April and then the pandemic hit,” Plombon said. “So I think some of those people still held off on doing it and maybe they still are.”
But if there’s one piece of advice the brokers can give, it’s this: If you’re looking to sell your house, do it now.
“We don’t have enough inventory. We have been able to sell houses during this pandemic in a manner that’s safe for everybody,” Addington said. “And they are flying off the market right now because the supply is not enough for the demand.”
Agents have been able to take buyers into a house for scheduled tours two at a time, with masks. It’s not the same as running to meet a group at a moment’s notice, Addington said, but it’s still very much possible to get a home tour.
When a buyer is interested in a property, there are many steps they can take before deciding to view it in person, which makes both them, the seller and the brokers more comfortable. They can ask for a video tour, drive by the house and check out the surrounding area or even search for the property on Google Earth.
After they’ve seen the house, the rest of the buying process goes forward as it usually does, Addington said.
In addition to an increase in prospective buyers, Six has also seen an influx of homeowners looking to refinance their mortgages now that interest rates have fallen upwards of 1 percentage point. He’s on track to do a few hundred more appraisals than usual by the end of the year.
Six said the last time he saw a market like this was 2004, when the government passed a bill which allowed homebuyers to forgo a downpayment and finance 100 percent of the home price. There were only 340 houses on the market in Frederick County that summer.
But a year later, the market tilted back the other way. By November 2008, there were 2,200 homes on the market.
And like the see-saw always does, by 2014, the market picked back up.
The market will feel the effects of the coronavirus for quite some time. So for those looking to buy a house, hesitation is not an option.
“They need to be prequalified and they need to be ready to jump if a good house comes on the market,” Six said. “They need to be ready to write a contract on it right away or they’re probably not going to get it.”
Follow Erika Riley on Twitter: @ej_riley