Spring and summer are historically the busiest real estate seasons, but as with everything, 2020 is shaking out a little differently. This year, record-low mortgage rates, skyrocketing buyer demand, and tight inventory have pushed the housing market’s busy season straight through to at least the end of the year. So if you’re ready to make your move, now’s a perfect time. Here’s why.
Low mortgage rates driving demand
Thanks to the uncertainty created by the coronavirus, the Federal Reserve has kept interest rates low in an effort to support a shaky economy, and rates for 30-year fixed-rate mortgages have been hanging around 3%. Buyers who want to take advantage of these low rates to secure their next home for less are helping extend the usual spring buying season as they continue to house hunt. According to the National Association of Realtors Chief Economist Lawrence Yun, 2020’s housing market has outperformed the 2019’s housing market, predicting that this year’s home sales would end up higher than the 5.34 million homes sold in 2019.
It is these low rates coupled with California’s strong housing recovery that are encouraging motivated buyers to purchase homes. However, buyers are up against persistently low housing inventory which continues to push up home prices and create tough competition for the limited homes available on the market. Click here to find out what your home’s current worth.
Rising home prices
California home sales climbed to their highest level in more than a decade this August according to the latest report from the California Association of REALTORS. Median home prices are now at $706,900, up 6.1% from July and up 14.5% from last August. Higher-priced properties are recovering faster than the rest of the market, and total sales climbed above the 400,000 level for the second straight month since quarantine halted the market in spring. This marks the first time since the summer of 2016 that home sales have increased from the previous month three months in a row.
Sellers are starting to return to the market, but not fast enough to keep up with the skyrocketing demand. So as buyers compete for limited inventory this fall, home prices are expected to continue rising. Closing a home sale is certainly different in today’s market, but it can be done. Safe home showings, virtual open houses, and extensive digital marketing are helping homeowners reach today’s motivated buyers and sell for top dollar. It’s a classic seller’s market and the ideal time to sell for most homeowners to cash out on their hard-earned equity in order to move onto a new home to better fit their new needs and lifestyle.
Meeting new needs
COVID-19 has brought changes to our everyday lives that have fundamentally changed our home needs. The need for multifunctional, spacious homes has increased as adults are working from home, kids are doing virtual learning, and everyone prioritizes the need for more usable indoor space. An unprecedented number of Americans are working from home because of the pandemic, and there is a strong indication that this will continue even after the eradication of coronavirus.
Outdoor spaces have also been growing in popularity as they coincide with public health recommendations for safe, socially distanced entertaining. House hunters today are not only looking to take advantage of historically low rates, they’re searching for a home that will meet their new needs and wants as we embrace our new normal and lasting lifestyle changes.
With the fast pace at which homes are being sold, mortgage rates likely to remain at historic lows, and the long-term changes to American’s home needs, it is safe to say that this fall is officially the new spring real estate season for 2020.