It’s been one year since the coronavirus pandemic disrupted the housing market. It was a year of extremes for the global real estate market. It started out looking bright but was soon derailed by the pandemic which caused world economies to falter. Going into the latter part of 2020, the rebound was sharp with demand for residential real estate surging. The housing market is expected to continue its winning streak in 2021 as a strong seller’s market.
A seller’s market is when there are more people buying houses than houses for sale. In the Bahamas, a strong demand for housing from both local and foreign buyers has led to a shortage in inventory that reflects the global home price growth. This news should have sellers smiling. But what does the booming 2021 housing market mean for buyers?
Buying in a Sellers Market
The rule of thumb in real estate is that the best time to buy is when you are ready. Demand is up right now for many reasons - buyer's who delayed purchasing during the unpredictable past year are ready to buy, people are looking for larger homes to accommodate working from home, a move away from cities is shifting demand, and Millennials - the largest generation - are jumping into the housing market as the fastest-growing group of buyers.
Whatever your reason for buying, here are some tips to help make the process work in your favour in a seller’s market.
Know what homes are selling for in your desired area
Listing prices are not always an accurate reflection of what the property will sell for. Some properties may be listed underprice in hopes of generating a bidding war, while others may be priced in the seller’s hope of taking advantage of the low inventory market, rather than value. An experienced agent can tell you what similar properties have sold for, and what features are driving value.
Expand your search
Prices are always higher in the most popular neighbourhoods. Don’t limit your search to just a few of your top locations. Newer developments and condo communities are springing up with better amenities and square footage for less money. Similarly, homes and condos in established communities are coming back on the market as Baby Boomers reach retirement age. These older homes often offer more bang for your buck and require little investment to modernize.
Start with our list of Featured Communities and Condo Developments
The newly constructed Coconut Cove residences offer modern amenities in a small gated community in Western New Providence at affordable prices. Photo: Brian Austin, Bahamas Realty Agent & Broker
If you require financing, being prequalified shows true intent and gives the seller confidence that the deal will go through. Taking the time to meet with your bank/ mortgage lender before you begin your home search will give you a better chance of getting the home you want before someone else snaps it up. Similarly, cash offers indicate faster closing times and eliminate the risk of a mortgage not being approved - a big incentive for the seller to accept an offer.
Re-evaluate your wish list
With inventory low and demand high, you may need to re-evaluate your priorities. Perhaps a slightly longer work commute is made up for by a shorter school run. New construction and a spa-like master suite might make up for the lack of ocean views. Fewer bedrooms might be a sacrifice easily made up for by a dock for your boat in the backyard.
It can be helpful to make a list of your priorities before starting your search, but be flexible. Once you have toured a few listings, re-evaluate the list and rank the places you’ve seen in terms of the features that you loved, and those that are less important.
Don’t shop at the top of your budget
Shopping at the top of your budget can lead to disappointment. Closing costs can be high and it is important to prepare for those as well as any unexpected costs. Mortgages are often contingent on the appraised value of the home, and if you bid too high and your mortgage comes in below the offer price, you may need to self-finance more than you had initially planned for.
There can be benefits to shopping below budget. You can save money on the upfront cost of the home and use any extra funds to customize it to your liking and even add value for a future sale.
Opportunities exist if you know where to look. This unique villa is one of just 6 in a small community on famous Paradise Island. Recently renovated, and priced to sell, a few tweaks will make this the perfect island retreat. Listed with Broker/ Director Andrea Brownrigg.
The sooner you begin the process of your home search, the better. You should start by taking the time to familiarize yourself with the various communities on the island, what closing costs you will have, and how the real estate process works in The Bahamas. The more prepared you are when your dream home hits the market, the better your chances are of sealing the deal.
The luxury second-home market is also booming and predicted to continue through 2021. While new developments are under construction, availability is limited. According to a recent report compiled by Luxury Portfolio International, the demand from affluent buyers and investors is also far outpacing inventory, with the best properties moving faster than ever. Despite the low inventory 50% of affluent people surveyed believe this is a good time to buy.
Contact a Bahamas Realty estate agent today to learn more about the home buying process.