Surprise! The housing market isn’t as bad as you thought
It’s been about 50 days as of this writing since the nation began serious worry over COVID-19. Our lives look nothing like most of us predicted they would back in February. And with all of the uncertainty around our national health, unemployment, businesses struggling, and the stock market (to name only a few areas of our lives that have significantly impacted), most of us also assumed that the housing market would also take a beating. I think it’s fair to say that those of us in the trenches have been surprised. Allow me to elaborate.
Redfin published an article outlining trends in the housing market. These are national trends, of course, but they mirror what I have seen here in Central Ohio. Here are a few facts you may find surprising.
Demand Is On the Rise
As we all expected, housing demand fell significantly in March, to the tune of 34%, according to Redfin. However, buyers didn’t sit on the sidelines for long. As of last week demand numbers were back up. They’re still behind pre-pandemic levels, but they only lag by 15%.
Meanwhile, Supply Is Tightening Even More
We were already in a low-inventory environment before COVID-19 made its unceremonious entrance. Now, however, we are seeing far fewer new listings enter the market—to the tune of nearly 50% fewer listings nationally compared with this time last year.
The Result? Home Prices Are Not Plummeting
You all remember the Law of Supply and Demand from you Economics 101 class. We are seeing only a modest decrease in demand with a significant drop in supply. While the stock market saw a 33% drop in value, housing prices only fell 9%. As of the week ending April 19, home prices nationally were not only back up, but up 3% from the same week last year.
“Affordable, single-family homes is the segment of the market where sellers have the biggest advantage,” wrote Adam Weiner, Redfin’s chief growth officer. “Agents across the country are reporting that these homes often generate bidding wars with prices sometimes escalating tens of thousands of dollars above the asking price.” That is in sync with what I have seen in the last few weeks. I have watched at least five listings in the mid-$250k range receive offers numbering in the double digits within just a few days, going into contract for upwards of $15,000+ over list price. In that way, it’s almost like nothing has changed.
Are You Saying It’s Time to Make a Move?
I’m not going to urge anyone to do anything right now. Lots of us are in very uncertain financial times, and you have to take that as your primary consideration. However, for those people who are confident with their employment status, I do have a few thoughts. If you are looking at a lease that’s going to end in a few months and have been thinking of buying, don’t wait too long to start your search. It may take longer than you think. And if you’ve been considering selling your starter home in search of something that’s a little more “quarantine friendly,” you might be surprised how much your house is worth right now. With interest rates at lows most of us have never seen in our lifetimes, and with the increased equity you probably have in your house today, this might be just the time for a move up.
If you have any questions about the market today, please give me a call. For that matter, if you just need someone to talk to outside of the confines of your home, give me call then, too. I’m staying home just like you. I’m happy to commiserate. 🙂 Either way, I look forward to a chat soon. In the meantime, be well and stay safe!