Written by Jeremy White, REALTOR®
The events of 2020 definitely had an impact on the local housing market in Franklin, TN. We talk about what you can expect if you want to buy a home in 2021 and what other REALTORS® may be hesitant to tell you.
A Challenging Market for Buyers
2020 was a challenging year for homebuyers in the Franklin housing market, and 2021 might not be much better unless we experience a big change. That's why it's so important to have a real estate agent you trust.
Looking at the housing statistics for all of Williamson County for 2020, we see that the county ended the year with 5,997 home closings and 6,857 pending sales. Both of those numbers are up from 2019; with closed sales going up a steady 5.7% and pending sales going up a whopping 29.9%.
Many REALTORS® are championing these statistics to show how strong the real estate market in our area has been. However, where we see the impact of the pandemic is in the number of new listings coming on the market and our housing inventory, the number of active homes available for purchase.
In December 2019, Williamson County ended the year with 1,943 homes available to purchase. In December 2020, that number had dropped to just 576, which is a 70.4% reduction in inventory. Simply put, homes sales were higher in 2020 than 2019 due to the reduced number of homes available for purchase.
What Does that Mean for You as a Homebuyer?
If we continue on this trend, it will be difficult to locate homes for prospective buyers in Williamson County in the foreseeable future. Homebuyers will be competing over a much smaller number of available homes coming on the market. Homes will be selling as quickly as they are listed and prices will continue to rise. Consequently, you need to be prepared and understand what the housing market is really like if you’re thinking about buying a new home in Williamson County in 2021. Especially, if you're thinking of buying in Franklin.
Here are some of the trends you'll experience in 2021:
- Shorter showings - If there are fewer homes on the market available to view, then more buyers will be looking at the same handful of houses. To allow the maximum number of buyers to see their listings, some listing agents have started doing 30 minute showings. Keep in mind it's common in our market for buyers to only have one showing before they write an offer, so be sure to make that showing count.
- Showings may not be private appointments - Recently, we’ve seen a number of listing agents opt to have the first weekend as an open house, instead of allowing private showings. This makes it easier on the listing agent, but can be frustrating for homebuyers. After all, who wants to look at a house with 20 other homebuyers? Be prepared! You may show up to for an appointment and have to wait in line for your turn to see a home.
- Multiple offers - Because of the number of buyers in our market, listing agents and sellers have been using strict timelines for submittal and review of offers. A common strategy we’ve seen are sellers listing their homes on a Thursday morning with showings beginning on Friday and requesting buyers submit their “highest and best” offer by Sunday night. Reviewing those offers on Sunday night and choosing the best offer by Monday afternoon. Make sure that you choose an agent that has a strategy for getting your offer to stand out among the 10+ offers a seller may be reviewing on Sunday night.
- Loan pre-approvals are required with written offers - Long gone are the days of writing an offer on a house with a lender “pre-qualification.” A pre-approval letter is much stronger than a pre-qualification. During the pre-approval process, a lender actually goes through the initial underwriting process, taking into account your income, debts, credit score, and a slew of other criteria. If you are pre-approved for a specific dollar amount, it means that as long as nothing substantially changes with your financial situation, that lender will approve you for a loan of that dollar amount. Make sure your REALTOR® connects you with a local lender that understands the needs of our local market.
- Sellers rejecting contingencies - In our market with multiple offers, it is unlikely that a seller will accept an offer that has a sale of home contingency attached to it. With the number of buyers moving to the area from out of state that have already sold their homes, an offer with a sale of home contingency attached is just not competitive. If you are in a position where you need to sell your current home before purchasing your new home, we recommend getting your existing home under contract first. At that point, if you connect with a property you want to purchase, you can have a close of home contingency, which is much more enticing in the eyes of a seller.
- Buyers writing offers on properties sight unseen - According to one survey conducted by Redfin last year, in a group of nearly 2,000 home buyers, 63% made an offer on a property they hadn’t seen in person. We sold multiple properties that way in 2020. This is a trend we expect to continue into 2021. In our market, that means you may be competing with even more buyers that don’t live in the area and that are willing to accept the risks of purchasing a property sight unseen. You should know that’s your competition: buyers that want a house so bad they’re willing to pay for it without ever stepping in the door. If you are willing to purchase a property sight unseen, then you should know that we’ve been doing virtual showings and assisting buyers from afar since we opened our doors, and we’ve helped a number of buyers purchase properties sight unseen.
- Homes are selling quickly for list price or above - With multiple offer situations becoming the norm, it’s very common to see homes close for above list price. In some cases, $25,000 - $50,000 over asking price. Many of these homes will go under contract the same day they're listed.
Throughout the pandemic, the Nashville metro area (which includes the 13 counties surrounding Nashville) has continued to grow. The reports from 2020 are in: U-Haul stated Tennessee was the #1 state for one-way destination truck rentals, Bloomberg and the Nashville Business Journal both have shared data from 2020 showing that Nashville is a top destination for people moving from states with higher costs of living like California and New York.
What Can You Do?
If you are thinking about purchasing property in Franklin or Williamson County in 2021, we encourage you to reach out to us. Some of these numbers may be discouraging. We want you to know that we work incredibly hard to connect our clients with the best possible properties to meet their needs.
We believe there is power in knowing the numbers, and we strive to educate our clients honestly about the current housing market conditions. We don’t try to spin these numbers or gloss over some of the more challenging parts, because that’s what a salesperson does. You deserve a REALTOR® that is open and honest with you. We put your needs before our own and we strategize with you on how we can face these challenges together.