The real estate market is booming amidst or perhaps due to the Coronavirus. Home sales surged in the past couple of months, indicating how the pandemic is reshaping our notion of “home”. During the lockdown at the outbreak of the virus, we all stayed at home and were able to consider our physical home space. Now, with social distancing in place and with many Americans able to work from home, we have seen that people want to have more space. In fact, many are exiting city life in favor of the suburbs or even further out —-somewhere else that offers space as we spend more time at home. There has also been a shift of people preferring to live near family for those of us who are fortunate to be able to work from home.
While sales were slow in March and April due to the stay at home orders then in effect, home buyers now have new priorities for where they live or are accelerating their plans for homeownership in general. In fact, July sales numbers were the strongest the housing market has seen with re-sales of homes jumped 24.7% which was the strongest monthly housing gain ever r recorded dating back to 1968. Further, about 40% of home buyers polled by Realtor.com in June indicated that they wish to buy a home sooner because of COVID-19.
Low Interest Rates and The Economy
As many of us have (re)considered our “home,” the fact that banks offer low interest rates whether we refinance or purchase a home has also encouraged us to look at options in changing our current lifestyle.
While the economic health of the United States due to this pandemic is questionable, one of the few signs of strength is the housing market. Housing starts soared 22.6% in July from June, and even new home sales which consist of 10% of the market has roared back this summer. With increased demand for homes, other sectors in the economy benefit as home buyers spend more on goods and renovations.
Low interest mortgage rates helped spur the housing market, and now pent-up demand is pushing the market even higher. Lawrence Yun, chief economist at the National Association of Realtors commented, “The housing market is actually past the recovery phase and is now in the booming stage. New demand has been created because of the pandemic, with the work-from-home flexibility.” The average rate on a 30 year fixed mortgage is 2.99%; a year ago it was 3.55%.
Interestingly, the National Association of Realtors indicated that 34% of the sales in July was due to first-time buyers, including millennials who range from their mid-20s to late 30s. Older millennials who are now having children as well as younger millennials entering their 30s are a key demographic increasing demand for home ownership. Aside from millennials, people are seeking more space, especially those who are able to work from home. As a result, people who live in condos may be seeking townhomes and those who live in townhomes may be seeking single family homes, according to Bob Chew, a group leader at Berkshire Hathaway HomeServices Pen Fed Realty.
Prior to this pandemic, many of us would plan to plan—whether it was to go on a trip, meet a relative, go to college, change careers, etc. Perhaps this pandemic has taught us that we should “plan to not plan.” For those who are able to move, at least they can plan to have more space. We all certainly could not and did not predict COVID-19.
However, while some believe that with growing unemployment and the current overall Recession, the housing market will inevitably correct itself.
The housing market may indeed correct itself. But, the “positive” emerging from this pandemic is that we all have stopped to consider the meaning of home, the importance of space, and perhaps most importantly, the need to be near family.
From the trenches,
A look into the housing market update during the coronavirus pandemic. Don’t miss this next webinar when Roy Oppenheim discusses the Low Interest Rates, and the Real Estate Housing Boom.
September 1st, 2020 12:00 PM in Eastern Time (US and Canada)
Register by Tuesday September 1st, 2020 12:00 PM for the webinar by clicking on the link in the email invite. You’ll receive a confirmation email with a unique link to join the session. Click “Add to calendar” to ensure you don’t miss the webinar.
originally posted at: https://southfloridalawblog.com/the-coronavirus-pandemic-and-the-real-estate-boom/