The coronavirus pandemic has changed the way we live. We are now living a new “normal” and real estate is no exception. Before this, late spring and summer were the busiest times to buy and sell homes. This was driven mainly by families wanting to settle in a new home before the start of the school year. This year, children are at home attending school virtually. Many family members are still working from home. With what feels like an extended summer-on-a-budget, it’s hard to believe that today marks the beginning of Autumn and the beginning of the fall real estate market. Here’s 3 things you need to know about the fall real estate market.
In case you missed it, the past few months showed frenzied home buyers and reluctant home sellers. According to Realtor.com’s latest housing trend report, shoppers are paying an average of 10 percent more for homes than they did last year. And most homes only stay on the market for about 12 days. Most agree this trend will continue a few more weeks. And after that? It’s anyone’s guess. Here’s 3 things we do know.
1. Demand for Homes Remain High
As we enter the fall season, home values continue to rise and demand for homes is as strong as ever. This is mainly being driven by the historically low mortgage rates. According to the Mortgage Reports, “the Federal Reserve last week renewed its promise to keep buying mortgage bonds in bulk for the foreseeable future”. Forecasts from policymakers already indicate that the Fed’s near-zero interest rates will remain in place at least until the end of 2022. But the new way of thinking, announced on Thursday, suggests it could be much longer before rates rise again. Conventional loans are now at 2.875% APR for a 30-year, fixed-rate mortgage. This is great news for borrowers.
Another factor driving a high demand of homes this fall real estate market (according to Forbes) is the impact of the corona pandemic. Depending on where you live and who you work for, it seems working from home may be more permanent. People are also looking for more square footage to accommodate home offices, virtual schooling for children, and more at-home recreational activities. For those in the position to take advantage of the low interest rates, there is a demand.
2. Home Prices Remain Above Average
“Home prices were up 4.3% in the past year with more gains predicted to come over the next 12 months”. This is according to CoreLogic’s latest Home Equity Report for the second quarter of 2020. Additionally, it shows “U.S. homeowners with mortgages (which account for roughly 63% of all properties) increasing their home equity by 6.6% year over year”. This amounts to a collective gain of $620 billion, and an average gain of $9,800 per homeowner.
In Northern Virginia, the trend is even more dramatic. According to SmartCharts.com, the region saw median home sales from August 2019 to August 2020 increase by 9.9% compared to the national average of 4.3%. The leading counties/metropolitan areas are: Alexandria (23.6% increase), Fauquier County (12.9% increase), Fairfax County (9.6% increase), and Loudoun (8.7% increase). Areas with a deficit include Fairfax City (3% decrease) and Falls Church (13.3% decrease).
3. Impact of New Home Construction Sales
According to Zillow’s September 18th Report, ” The housing market has shown remarkable resilience through the pandemic, and in many regards, the new homes sector has led the charge. A shortage of available for-sale existing homes, still-low mortgage rates, and a possible and likely shift in preference toward new, never lived-in homes are all combining to drive business to home builders, and this will likely continue well into the fall”. Redfin senior economist Sheharyar Bokhari also says similarly, “The shortage of both new and existing homes is intensifying across America right now as record-low mortgage rates drive more demand, but the shortage of new homes is less severe due to a surge in construction right before the pandemic. As a result, sales of new homes are growing faster than sales of existing homes. Sales of new homes are also on the rise because the coronavirus pandemic is fueling interest in the suburbs—where there tends to be more space to build new homes.”
In the End
As the fall season starts off, these 3 things – demand for homes, above-average prices, and availability of new construction homes – are good things to keep in mind in regards to the fall real estate market. These are indeed new times so be sure to stay on top of the news. Another great source of information is your local realtor, who often has the answers you need .
Have questions? CONTACT ME.