Have you ever seen housing market changes like these? In all the years we’ve been in real estate, we can honestly say that 2020 has been a year like no other.
The economic and social impact of the pandemic alone would have been enough to produce largescale changes in the housing market. Additional factors are contributing to 2020’s real estate landscape, such as reduced interest rates and stable home prices.
The bottom line is that there’s good news for buyers, sellers, and homeowners alike in the current market. Sure, things may be different, but opportunities are still plentiful.
Let’s look at four key areas that are fundamentally defining this year’s housing market changes, as well as how you can position yourself to thrive in an unprecedented year.
The market held on
As we all know, a good deal of economic activity was intentionally paused this spring in response to the pandemic. Many aspects of common real estate transactions were placed on hold, as well. City halls & other government offices were temporarily shut down, adding snags to otherwise straightforward transactions.
Thankfully, adaptable real estate professionals used technology to keep their clients’ deals on-track, and the market saw increased sales from the previous year. Prices remained stable, also. On paper, if there weren’t a pandemic, the market performance would have looked like any other year.
According to the Housing Market Recovery Index by realtor.com, the market has surpassed pre-pandemic levels and has regained the strength we remember from February of this year, as seen in the below graph.
These housing market changes were largely for the better. Now, let’s get into why the market held on strong in 2020.
Historically low mortgage rates
Historically low mortgage rates have been another 2020 game-changer. Today’s low rate is one of the big motivating factors bringing more buyers into the market. The average rate reached an all-time low on multiple occasions this year, and it continues to hover in low territories.
When rates are this low, buyers have an opportunity to secure smaller monthly payments, as well as loan terms that make homeownership more affordable.
Homeowners benefit, too
Low rates indeed benefit house hunters, but they’re also good for current homeowners looking into refinancing their mortgages.
Homeowners may choose to lock in smaller monthly payments of their own rather than selling. Others may refinance to make home improvements or large purchases. Whatever the reason, low rates have inspired more homeowners to stay in their homes during an uncertain time.
The result? Low inventory on the housing market.
We’ll explore what that means next.
Home prices remained stable
One of the key drivers of home price appreciation this year is historically low inventory. Inventory was low going into the pandemic, and it is still sitting well below the level needed for a normal market. Although sellers are slowly making their way back into the game, buyers are scooping up homes faster than they’re coming up for sale.
This is a classic supply and demand scenario, forcing home prices to rise. Selling something when there is a higher demand for what is available naturally bumps up the price. If you’re ready to sell your house today, this may be the optimal time to make your move. As Bill Banfield, EVP of Capital Markets at Quicken Loans, notes:
“The pandemic has not stopped the consistent home price growth we have witnessed in recent years.”
2020’s housing market has produced real benefits for both sellers & buyers alike. With mortgage rates at historic lows and home prices remaining stable, 2020 has seen a good deal of housing market changes with no end in sight.
It’s one thing to be aware of these realities, and it’s another thing to know how to work within these changes to get results that work for you. We offer cutting-edge technology, expert analyses, and detailed market knowledge to get you the results you deserve.