US Housing Market Activity Increasing Since the Onset of COVID-19
Prior to the outbreak of COVID-19, new-home sales had risen to a higher level than had been seen in years. Price appreciation was booming: little inventory was available, mortgage rates were low, and home prices were steadily increasing, all of which created a uniquely positive time for both buyers and sellers. When the pandemic started in the United States, however, the outlook was grim as job losses mounted and the economy took a sharp downturn. Surprisingly, despite a lull in April, the US real estate market rebounded quickly. While market conditions can often fluctuate, currently, home listing and sale activity is stronger than pre-pandemic levels. As we’ll discuss below, current circumstances indicate that now may be the ideal time for individuals to list and sell their homes.
Current Real Estate Trends
Continued Lack of Inventory: The number of home seekers continues to outnumber the number of available options on the market. This creates desirable conditions for homeowners who do list their properties, since their homes are in demand.
Low Interest Rates: Interest rates have dipped historically low, making the prospect of buying a home more appealing and affordable for well-qualified buyers.
A Shift from Renting to an Interest in Buying: Many renters are considering purchasing homes for a variety of reasons, some of them for the first time. Some are seeing the advantages of homeownership – from owning an asset to having greater control over their living spaces; thanks to low mortgage rates, they are also finding this option feasible. Depending on the area and scenario, others are finding that a mortgage payment would be lower than their monthly rent. Others are seeking to leave crowded cities for more personal space in the suburbs in response to the pandemic.
Resulting Impacts on the US Real Estate Market
As a result of the above trends, SIRVA has seen significant impacts on the current US real estate market. As a result of low inventory and mortgage rates, we’ve seen buyers “bidding up” to win their properties of choice which, in turn, has driven sale prices up and the number of days a home spends on the market down. SIRVA data shows that, since 1 May 2020, home values are up almost 5 per cent and the average number of days on the market has dropped 8 per cent compared to last year.
Unemployment rates will likely impact the housing market in the future, should the economy continue to see extended shutdowns.
What this Means for Homeowners
While the uncertainty surrounding the pandemic can be a concern for some individuals, thanks to the trends and impacts listed above, now may be the perfect time for homeowners to list their homes if they’re considering doing so. Competitive bidding and higher sale prices can be strong incentives – along with the knowledge that there are plenty of potential buyers in line who are interested in making a purchase. For assistance, please contact us at concierge@sirva.com.
SIRVA manages over 5,000 home sales and 14,000 home purchases, annually. During these unprecedented times, our employees and agents continue to provide guidance and support when companies and their employees have decided to move forward with selling or purchasing a home. Please work with your relocation consultant for the most up-to-date information, as the market continues to fluctuate.
Sources:
Joel Kan. Fed Puts Rate Cuts on Hold: MBA Economic and Mortgage Finance Commentary: 20 January 2019. www.mba.org. MBA Forecast Commentary. 20 January 2019. (Accessed 17 August 2020.) file:///C:/Users/ZZZ2120/Downloads/Forecast%20Commentary%20Jan%202020%20(3).pdf
Diana Olick. Lower Mortgage Rates are Causing an Epic Housing Shortage. www.cnbc.com. Real Estate. 15 October 2019. (Accessed 17 August 2020.) https://www.cnbc.com/2019/10/15/lower-mortgage-rates-are-causing-an-epic-housing-shortage.html
Diana Olick. Existing Home Sales Plunge in May, but Realtors Think That was the Bottom. www.cnbc.com. Real Estate. 22 June 2020 (Accessed 17 August 2020.) https://www.cnbc.com/2020/06/22/existing-home-sales-plunge-in-may-but-realtors-think-that-was-the-bottom.html
Angela Waugaman. Mortgage Rates Drop, Reaching Another All Time Low. www.globenewswire.com. Freddie Mac. 18 June 2020 (Accessed 17 August 2020.) https://www.globenewswire.com/news-release/2020/06/18/2050255/0/en/Mortgage-Rates-Drop-Reaching-Another-All-Time-Low.html#:~:text=MCLEAN%2C%20Va.%2C%20June%2018,which%20dates%20back%20to%201971.
Amanda Lauren. How Coronavirus is Impacting Home Buyers and Sellers. www.forbes.com. 6 March 2020. (Accessed 17 August 2020.) https://www.forbes.com/sites/amandalauren/2020/03/06/coronavirus-is-a-public-health-crisis-but-a-boon-to-real-estate-buyers/#103cef5c436b
Realtor.com. 2020 Housing Market Predictions: COVID-19 Update. www.realtor.com. May 2020. (Accessed 17 August 2020.) https://www.realtor.com/research/2020-housing-market-predictions-covid-19-update/
Contributors:
Margaret DeLuca | Director, Real Estate Risk
Lisa Marie DeSanto | Manager, Content Marketing
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