Looking to move? Expect competition if you’re buying.
With the coronavirus pandemic, moving out of dense cities and into the burbs (or beyond) is becoming even more appealing. Add in record-low interest rates on 30-year mortgages in the month of June and moving could seem like a really good plan.
Well, if you’re a buyer, there’s a bit of bad and maybe unexpected news. For one thing, even though it may feel like the coronavirus has put a spotlight on living in relatively wide-open areas, reports show that people have been steadily moving away from cities for a while.
This additional influx of home seekers means even more people are looking to buy homes in a market where there aren’t a lot of houses for sale.
The competition is tough: Real estate company Redfin said on a recent blog post that demand was 16.5% higher in April – as in higher than it was before coronavirus – on a seasonally-adjusted basis.
One Redfin agent based in Nashville was quoted saying sales are moving so fast that houses are snapped up before he even gets to sell them.
And there are signs that a post-pandemic housing market recovery is taking hold. While the National Association of Realtors has said overall sales slowed to a crawl for the past few months, pending-home sales (which measures contract signings and can be seen as a more forward-looking indicator) saw a dramatic 44.3% increase in May compared to April.
“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” Lawrence Yun, NAR’s chief economist said in a press statement. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
But inventory problems remain.
“More listings are continuously appearing as the economy reopens, helping with inventory choices,” Yun said. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade."
Mortgage rate locks are also proof that competition is out there. Goldman Sachs Research noted that mortgage purchase rate locks – which is a sign buyers are ready to commit to a mortgage – were up 18% over the previous year for the week that ended May 22. That’s as in before Covid-levels.
In terms of the possibly unexpected . . . despite the economic turmoil, it may be a surprise that home prices aren’t dropping. This is good for sellers, and even better (if you’re selling) is that The Wall Street Journal and The New York Times say home prices have been rising.
So what’s next? It looks like the best bet is to keep looking. Construction hasn’t really picked up for single-family homes but, pandemic aside, the increased ability for many employees to work from home can mean the competition will not be letting up.
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