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The Surging Real Estate Market Continues to Climb
Earlier this year, realtor.com announced the release of the Housing Recovery Index, a weekly guide showing how the pandemic has impacted the residential real estate market. The index leverages a weighted average of four key components of the housing industry by tracking each of the following:
- Housing Demand – Growth in online search activity
- Home Price – Growth in asking prices
- Housing Supply – Growth of new listings
- Pace of Sales – Difference in time-on-market
The index compares the current status “to the January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”
The graph below charts the index by showing how the real estate market started out strong in early 2020, and then dropped dramatically at the beginning of March when the pandemic paused the economy. It also shows the strength of the recovery since the beginning of May.
Today, the index stands at its highest point all year, including the time prior to the economic shutdown.
The Momentum Is Still Building
Though there is some evidence that the overall economic recovery may be slowing, the housing market is still gaining momentum. Zillow tracks the number of homes that are put into contract on a weekly basis. Their latest report confirms that buyer demand is continuing to dramatically outpace this same time last year, and the percent increase over last year is growing.
Clearly, the housing market is not only outperforming the grim forecasts from earlier this year, but it is also eclipsing the actual success of last year.
Frank Martell, President and CEO of CoreLogic, explains it best:
“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic.”
Bottom Line
Whether you’re considering buying or selling, staying on top of the real estate market over the coming months will be essential to your success.
Home buyer Traffic Is on the Rise
One of the biggest surprises of 2020 is the resilience of the residential real estate market. Lawrence Yun, Chief Economist of the National Association of Realtors (NAR), is now forecasting that more homes will sell this year than last year. He’s also predicting home sales to increase by 8-12% next year. There’s strong evidence that he will be right.
ShowingTime, a leading showing software and market stat service provider for the residential real estate industry, just reported on their latest the ShowingTime Showing Index:
“Home buyer traffic jumped again in July, recording a 60.7 percent year-over-year increase in nationwide showing activity.”
That means there are 60% more buyers setting appointments to see homes than there were at this same time last year. The number of potential purchasers was also up dramatically in every region of the country:
- The Northeast was up 76.6%
- The West was up 56.7%
- The Midwest was up 52.1%
- The South was up 46.7%
The Housing Market Is Showing a ‘V’ Type Recovery
ShowingTime also indicates the real estate market has already come back from the downturn earlier this year that was caused by shelter-in-place orders. Here are the year-over-year numbers for each region on a monthly basis (See graph below):
We’re way ahead of where we were at this time last year. This data validates the thoughts of Frank Martell, President and CEO of CoreLogic, who recently noted:
“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic.”
Bottom Line
If you’re thinking about selling your house, this may be a great time to get the best price and the most favorable terms.
Have You Ever Seen a Housing Market Like This?
The year 2020 will certainly be one to remember, with new realities and norms that changed the way we live. This year’s real estate market is certainly no exception to that shift, with historic highlights continuing to break records and challenge what many thought possible in the housing market. Here’s a look at four key areas that are fundamentally defining the market this year.
Housing Market Recovery
The economy was intentionally put on pause this spring in response to the COVID-19 health crisis. Many aspects of the common real estate transaction were placed on hold at the same time. Thankfully, technology and innovation helped the industry power forward, and business gradually ramped back up as shelter-in-place orders were lifted.
The result? Total transformation of the market from rock-bottom lows to exceptional highs. Today, the housing recovery is being called truly remarkable by many experts and is far exceeding expectations. From pending home sales to purchase applications, buyers are back in business and homes are selling – fast.
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 (See graph below):
Record-Breaking Mortgage Rates
Historically low mortgage rates are another 2020 game-changer. Today’s low rate is one of the big motivating factors bringing buyers back into the market. The average rate reached an all-time low on multiple occasions this year, and it continues to hover in the record-low territory.
When rates are this low, buyers have a huge opportunity to get more for their money when purchasing a home, something many are eager to find while continuing to spend more time than expected at home this year, and likely beyond.
Continued Home Price Appreciation
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.”
Increasing Affordability
Even as home prices continue to rise, affordability is working in favor of today’s homebuyers. According to many experts, rates this low are off-setting rising home prices, which increases buyer purchasing power – an opportunity not to be missed, especially if your family’s needs have changed. If you now need space for a home office, gym, virtual classroom, and more, it may be time to reconsider your current house.
According to Mortgage News Daily:
“Those shopping for a home can afford 10 percent more home than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power.”
Bottom Line
With mortgage rates hitting historic lows, home prices appreciating, affordability rising, and the market recovering like no other, 2020 has been quite a year for real estate – perhaps one we’ve never seen before and may never see again. Let’s connect today if you’re ready to take advantage of this year’s record-breaking opportunities.
Three of the Latest Reports Show Housing Market Is Strong
The residential real estate market is remaining resilient as the country still struggles to beat the COVID-19 pandemic. Three separate reports recently revealed how the housing market is still showing growth. Here’s a look at each one.
1. Ivy Zelman’s Real Estate Broker Survey
The survey explains that purchaser demand remains strong:
“This month’s overall homebuyer demand rating…was easily the strongest sequential gain in our survey history…Strength continues to be led by the entry-level…While high-end demand is less robust in an absolute sense, there has also been relative improvement, with contacts attributing incremental improvement to the stock market’s rebound, record low mortgage rates and luxury customers trading out of high-priced cities.”
2. The National Association of Home Builders Housing Market Index
The index reveals that builder confidence has returned to levels last seen prior to the pandemic:
“In a strong signal that the housing market is ready to lead a post-COVID economic recovery, builder confidence in the market for newly-built single-family homes jumped 14 points to 72 in July, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI now stands at the solid pre-pandemic reading in March before the outbreak affected much of the nation.”
3. The realtor.com Housing Market Recovery Index
This index leverages a weighted average of four key components of the housing industry, tracking each of the following:
- Housing Demand – Growth in online search activity
- Home Price – Growth in asking prices
- Housing Supply – Growth of new listings
- Pace of Sales – Difference in time-on-market
It then compares the current status “to the last week of January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”
The latest results came in at 101, with realtor.com explaining:
“The U.S. Housing Market has recovered from the immediate disruption caused by the COVID pandemic and returned to January 2020 growth levels.”
Bottom Line
Real estate brokers, home builders, and industry data all agree that the housing market has surged back to pre-COVID levels, showing growth, strength, and incredible resilience.
