The data continues to show a promising rebound for the housing market. After a massive halt in March and April due to COVID-19, pending home sales, listings, and solds have continued to increase month-over-month, showing that buyers are back in the market. There is demand out there in the housing market. Agents need to continue monitoring the data, keeping an eye on the trends, and working hard to stay on top of their goals.
“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.” – Lawrence Yun, Chief Economist at NAR
There are several factors influencing these patterns and it’s important to understand these nuances and how they affect the ebbs and flows of the market. We’ve identified a few of these factors below!
1. All-Time Low Interest Rates
Low interest rates on long-term mortgage loans have fallen even further, hitting an all-time historic low in August, 2020. “Mortgage buyer Freddie Mac reported Thursday that the average rate on the key 30-year fixed-rate mortgage fell to 3.07%, down from last week’s 3.13%. For the second week in a row, it is the lowest level since Freddie began tracking average rates in 1971. A year ago, the rate stood at 3.75%.”(ABC News)
2. Remote Workforce
COVID-19 has forced many companies to quickly pivot and adapt to remote work. And a lot of those companies have been surprised by how successfully their staff has been able to stay productive and get work done.
In fact, a recent survey showed that 75% of respondents plan to increase the number of permanent remote employees. (Gartner) Additionally, a study asking employees if they would choose to go back to the office or continue to work from home showed that 60.2% would continue to work from home. (Hanley Wood)
With so many Americans working remotely, and even having the possibility of continuing remote work after the office becomes safe again, the prospect of relocating to a more desirable area or a more comfortable home is more commonplace.
3. Pent-Up Demand
After the drop in the March and April spring months, the data has continued to show a steady bounce back — indicating pent up demand from the spring. In fact, the number of people applying for home mortgages increased for nine consecutive weeks and recently hit the highest level in over 11 years. (Mortgage Bankers Association)
“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring.” — Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association
4. Life Events Continue to Happen
The pandemic may make it seem like the world has stopped, but while things have changed, life continues to go on. Major life events; graduations, babies, promotions or job changes, marriages, retirements, downsizing, etc… these events are continuing to happen.
As we mentioned before, more Americans are working remotely than ever before. This also means there are more people in the home at one time. That means more couples and co-habitators spending almost all of their time “stuck” in the same home. Naturally, this leads to the home feeling a bit more cramped or the recognition of a need for a home office or space for exercise.
As long as agents are able to follow safety precautions, pivot to virtual tasks if needed, and continue to serve their consumers, the market will continue to regain strength.