Here’s what the market looks like for homeowners who want to build an ADU.
Continuing my series about how to create wealth through real estate via an ADU, I’m going to shift my focus to the market and how it is right now for investors. I’ll take a look at the second quarter numbers of 2020 and compare them to the second quarter numbers of 2019.
In April of 2019, we had 2,500 new listings come on the market, and 1,787 homes went under contract. That means 71% of the listings were going to escrow each month, and that gave us 1.4 months of inventory. These figures were pretty steady throughout May and June 2019 as well.
In 2020, we saw a big drop in homes under contract in April. There were 1,344 homes listed in April and 869 of them went under contract. That’s a 65% drop.
However, since then, we have seen a recovery. In May 2020, we had 1,828 new listings and 1,435 homes that went under contract. That was a 65% jump from April, which is great news.
“You can benefit from adding an ADU because demand for housing is so strong.”
In June, we saw a 6% increase in the number of listings from what we saw in June 2019. That’s a great sign for the future of our market. This is a result of pent-up demand being released as stay-at-home restrictions slowly lifted.
How’s pricing? In June 2019, the average price per square foot was around $378. Right now, we have an average price per square foot of $387. We haven’t seen a big jump, but we’ve seen a healthy increase, which is a good sign.
If you ask me, it’s a great time to invest in building an ADU for your home. Many sellers aren’t selling, so you can benefit from adding housing to your home because there is demand for it.
If you have any questions about the market, investing, or real estate in general, don’t hesitate to reach out via phone or email. I look forward to hearing from you.
