Dane County was a seller’s market in 2020—here’s what to expect from 2021.
Today I’ll provide a quick recap of our Dane County real estate market for last December and 2020 as a whole and a preview of what’s to come for the rest of 2021.
The pandemic caused a huge slowdown in home sales and home purchases, but as everyone sheltered in place, many realized that they wanted homes with more space. This led to a surge of buyers seeking bigger homes (or ones that were more conducive to working or schooling from home).
Last December, the year-over-year median price rose 9.7% from $290,000 to $318,250, and the number of sales rose 19% from 568 to 676. Normally the winter months are our slow period, and December is usually the quietest month of all in terms of accepted offers. However, in this case, demand was high due to low inventory.
Here in Madison, as of the recording of this video, there have been 3,826 home sales over the past 12 months, and we currently have 329 active listings. 181 of those have an accepted offer, leaving 148 listings that are available without an accepted offer. This translates to roughly 0.46 months of inventory, which puts us in a severe seller’s market. Homes are moving very rapidly and for big money. In spite of the pandemic (or because of it), closed sales in Dane County throughout 2020 rose 8.3% compared to 2019.
What about interest rates? As 2020 ended, the average rate for a 30-year fixed mortgage was 2.67%, which is unheard of. This has helped buyer affordability, as it’s made money inexpensive to borrow. This should continue to push sales throughout 2021. Some pundits predict that interest rates will see a moderate rise this year, but the Federal Reserve is saying they’re committed to keeping rates low. It’s hard to know what to expect from them, but I believe rates will hover around 3%. They may creep into the mid-to-high 3s, but even that is an extremely affordable rate.
Despite the pandemic (or because of it), closed sales in Dane County throughout 2020 rose 8.3% compared to 2019.
For the rest of 2021, sales are expected to increase slightly compared to 2020, and I think the trend of buyers looking to upsize will continue. Now that companies have seen that people can successfully work from home, we may continue to see buyers move further and further away from where their company is located. Traditionally home prices tend to increase by an average of 4% per year, but we think this year they may increase at a rate of 5% to 6% or even higher.
As always, if you have questions about our Dane County market or are thinking of buying or selling a home soon, don’t hesitate to reach out to me. I’m happy to help.