Some Americans may be under the impression that a gloomy housing picture is prompted by high unemployment and recession rates. They’re wrong.
Home buyers may be in for a surprise, and if they fall into any common misconceptions about the housing market, homeowners may be losing out on opportunities.
After all, with unemployment so high and a pandemic raging on, homeowners might be skittish. How could it possibly be a good selling time?
The truth is, buyers want a place to call home badly, but many homeowners prefer not to sell. Compared to a year earlier, new-home listings plummeted 14 percent in early July. According to realtor.com's Weekly Housing Trends report for July 11, the total inventory is 32 percent lower year-over-year.
“Given the pandemic and uncertainty it’s caused, the general sentiment [among some owners] is that now is not a good time to sell your home,” says Danielle Hale, realtor.com®’s chief economist. “Yet so far, the data suggests the opposite—that buyers outnumber sellers in the housing market, which means it’s better to be a seller than a buyer.”
Home buyers eager to purchase are sparking bidding wars as they compete for limited inventory. “Multiple offers could be fairly common over the next few months,” says Lawrence Yun, NAR's chief economist.
Currently, house prices are soaring. The national median price for single-family homes rose by 7.7 percent to $274,600 during the first quarter of 2020. “We’re seeing home prices grow faster than pre-COVID-19,” Hale says. “In fact, they are on pace with the home price growth we saw this time last year.”
Record low mortgage rates boost buying power, Yun adds. “And when combined with a lack of supply will result in higher and higher home prices,” he says.
During a pandemic, urban centers definitely present more obstacles for social distancing than less densely populated areas. Overall, suburban listings are showing greater interest nationwide. According to realtor.com ® study , the number of views on properties in suburban ZIP codes grew 13 percent in May, almost double the views earned by listings in urban areas.
“We have seen homebuying demand recover faster in the suburbs and rural areas than urban areas,” Hale says. “There’s also evidence of home shoppers in cities that were hit early and hard by COVID-19, such as New York and Philadelphia, are seeking homes in nearby smaller communities at a higher pace, like the Poconos.”
Having said that, not everybody is leaving the city. This could be based partly on the affluent, who can afford to do so. Also, picking up and moving isn't easy for everyone.
“This pandemic, although bad, will eventually pass," Karl Jacob, CEO of LoanSnap, told realtor.com®. "And when it does, are people really going to stop wanting to be in a city? I just don't think that's the case. Even though you can get delivery from GrubHub every night, it doesn't mean you're never going to want to go out to a restaurant, and if you have to drive 30 minutes to a restaurant versus being able to walk around the corner, that's a different lifestyle."
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