The Topeka real estate market has been really booming in spite of the national COVID-19 pandemic. What do I mean by booming?
Well, the market is great for sellers and buyers. Let me explain. We are finding that buyers can afford more with the current interest rates being at a historical low. They can actually afford a more expensive house because the low interest rate brings down their monthly payment dramatically.
For example, If a buyer’s monthly mortgage budget is $1,000, right now, if they get locked into a mortgage at a 3% rate they can afford a $165,000 home with payments around $1,021 a month (including PMI, home owner’s insurance, and property taxes). If we look at that same $1,000 budget and an interest rate is at only 5% this buyer would only be able to afford a $130,000 home per the monthly payment of $1,023 (including PMI, home owner’s insurance, and property taxes). You can also see these savings in the long term effect as well:
So as you can see there are definitely advantages to buying a home right now! Now lets look at the seller side….
As a seller you are entering a market with very little to no competition. This means that the buyers shopping for a home comparable to yours aren’t finding many options or they don’t have any options at all!
So when you list your home you can inevitable list it for a little bit higher than what a past market might have supported!
This is also causing homes to sell more quickly as well. The average days on market has decreased by 25% from Aug, 2019 to Aug, 2020.
In Aug, 2019 the average purchase price in Shawnee County was $147,653. This has increased this year by 8.9% to $160,813 in Aug, 2020.
Take a look at the graph below to see the rise and fall of the average purchase price in Shawnee County since 2018.
Taking a look at this graph, you can see in the past 2 years the average purchase price was higher in September than it was in August. Then it went down again in October, a little spike in November, then back down in December.
Some might say “But won’t prices go back up in January and then just peak again next summer?” It may, but then again with some of the housing and economic circumstances today…. it may not.
If you are a home buyer, right now is a great time to buy a home. You will save money in the long run and each and every month with a lower payment.
If you are an investor, right now maybe a good time to cash out if you have empty properties or if you can sell the home with tenant agreements included. You would be selling your investment for top dollar today near the peak of the market just to purchase a new income generating property in what could be a down market next year.
If you are a seller, you may have missed the opportunity to sell at the very peak of the market, but it’s not too late! If you are in a position to sell this fall, we believe you will make more profit now rather than waiting to sell next year.