No one can tell you which way home sales and prices are headed. That makes you, your own trusted advisor as you seek what’s best for your household in deciding whether to purchase a home.
The Coronavirus pandemic slowed life down and even the spring home buying/selling season was delayed. As we transition through summer and you consider whether now is a good time for you to purchase or sell your home, make sure to keep these home supply and demand trends and projections in mind.
- Local affordability: As of late spring, the typical U.S. household could afford to buy 40 percent of homes currently listed for sale compared to 34 percent a year earlier. More specifically, affordability increased in 10 local urban and suburban markets across seven individual states much higher than it did nationwide, including Texas, Iowa, North Carolina, Indiana, Arizona, Washington, and Utah. (“Top 10 Best U.S. Markets for Millennial Homebuyers in a COVID-19 World Revealed” by World Property Journal)
- Pent-up interest: Before COVID-19 hit, demand for homes was strong from high buyer interest (historically low interest rates coupled with a hot job market) and low seller inventory. This phenomenon, combined with the economy coming out of the pandemic, may actually turn into higher-than-forecasted demand for homes as pent-up buyers rush back into the market. (“Will More Americans Buy a Home Because of Coronavirus?” by Forbes)
- Remote popularity: COVID-19 has boosted many buyers’ willingness to purchase a home without physically visiting it, as well as owners’ expectations of selling a home without showing it to potential buyers in person. Are you in this crowd, or not? (“Desire to Own a Home Remains Strong During COVID-19, says NAR” by Mortgage Professional America)
- Really low rates: Putting COVID-19 real estate issues aside, record-low mortgage rates combined with a glut of down-payment money for certain individuals/couples who’ve been saving money during the pandemic could cause a rush on some homes. However, this could be offset by neighborhoods where would-be movers have put off selling their houses due to future uncertainty, thus tightening inventory. This phenomenon will be give-and-take depending on the locality. (“Here Come the Homebuyers” by Housing Wire)
- Distorted market equilibrium: As buyer demand dropped due to COVID-19, the quantity of would-be sellers putting their homes on the market didn’t just fall in lock-step — it plunged even lower, distorting market equilibrium. (“The Economy is Tanking. So Why Aren’t Home Prices Dropping?” by Curbed)
- Seller sentiment: Only 32 percent of Americans believed it was a good time to sell a home as of May, an increase from the month before (29 percent) but still depressed from the 66 percent seen in February 2020. The number of those willing to sell their home can be affected by uncertainty over the economy, job market, and mobility. (“Home Purchase Sentiment Index Rises Slightly, Remains Near Survey Record Low” by Fannie Mae’s Home Purchase Sentiment Index)
- Less households moving:About one in 10 Americans moved between 2018 and 2019, a decline from nearly one in five during the 1980s. While there is little consensus as to why Americans are moving less, demographic change, housing affordability, and changes in labor dynamics are contributing to this trend. To some extent, less moving equals less homes for sale on the market. (“Are Americans Stuck in Place? Declining Residential Mobility in the U.S.” [jchs.harvard.edu] — a Research Brief by the Joint Center for Housing Studies at Harvard University)
COVID-19 put a damper on real estate market activity, not a dent. Consider what’s right for you, and don’t be afraid to test the waters.