The holiday season is not traditionally known to be a strong season for home buying. But, this is 2020, and things have looked different all year long.
The Impact of the Election
The election seemed to briefly slow down home buyer demand, but we are now are seeing demand rise due to the continuation of low mortgage rates. Even with a resurgence of the coronavirus in many states, the job market is maintaining its recovery and the market is responding to the news of a vaccine being available by early/mid 2021. In fact, the number of property searches have already surpassed pre-COVID numbers due to people wanting more space or looking to maximize their purchase power.
Lenders issued roughly 1.05 million home purchase mortgages in the third quarter of 2020, up 25 percent year-over-year. *
Inventory Is Still Low
The total inventory of available houses for sale is still low which is causing bidding wars in many areas of the U.S. This is also causing the limited homes on the market to sell faster than we usually see this time of year.
With this shortage of existing single-family homes for sale, construction has boosted for newly built homes. We are seeing single-family home building activity rising and are actually at their highest levels since 2007. There is still a long way to go in terms of inventory replenishment.
The most recovered markets for new listings in November 2020 include San Francisco, San Jose, Las Vegas, Seattle, and Portland.
Buyers Seeking Larger Homes in the Suburbs
The pandemic has changed what home buyers want since more time is being spent at home than ever before. Home buyers in 2020 continue to look at larger homes with more outdoor space in suburban hot spots to get more house for a lower price.
If you are entertaining the idea moving to the suburbs check out the top 12 hot spots to live based on cost of living, crime levels, quality of local school systems, median household income, and more.
Here Are the Top 12 Suburban Hot Spots:
Foreclosure Concerns
With the forbearance program still in place for many homeowners, a surge of foreclosures like we experienced from 2006-2008 are unlikely. Today’s homeowners likely have a record amount of equity in their homes and with the ongoing tight inventory should be able to sell their homes and walk away with cash in their pocket instead of foreclosing.
Once forbearance programs expire, there are alternative ways money owed can be paid back over a designated period.
Bottom Line
The pandemic has challenged just about every sense of normalcy we have become accustomed to. The year 2020 continues to surprise everyone. Record low interest rates have heated up the mortgage market with no signs of cooling down, despite winter being just around the corner.