The COVID-19 pandemic has had a significant impact on the real estate market, and we'll likely be feeling that impact — even if indirectly — for years to come. However, despite the pandemic's effect on the economy and the significant shift toward remote work, the market has remained strong. Let's take a look at some interesting statistics on home sales during the lockdowns.
1. Increased Demand for Single-Family Homes
With the pandemic, many people started spending more time working from home, which caused a shift in home ownership priorities. There has been a significant increase in demand for single-family homes with more space for home offices and outdoor areas. In August 2020, the National Association of Realtors reported an 11% increase in single-family home sales compared to the same period in 2019.
2. Low Mortgage Rates
Interest rates reached historic lows, hovering around 3%. These low rates have made it easier for buyers to purchase homes despite the economic impact of the pandemic. According to Freddie Mac's Primary Mortgage Market Survey, the average 30-year fixed mortgage rate dropped to 2.65% in January 2021, compared to 3.72% in January 2020.
3. Limited Inventory Leading to Multiple Offers
Limited inventory has been a significant challenge for buyers, resulting in bidding wars and increased home prices. According to a report from the National Association of Realtors, housing inventory was down 23% year over year in December 2020, with approximately 1.07 million homes for sale.
4. Increased Use of Virtual Tools
Due to social distancing and remote work restrictions, many real estate professionals have turned to virtual tours, video conferencing, and digital tools to facilitate home tours, meetings, and transactions. A recent survey by the National Association of Realtors found that 56% of agents reported using virtual tours to showcase their properties during the pandemic.
5. Rise of Suburban and Rural Locations
Many people are now seeking less densely populated areas, accelerating the migration from big cities to suburban and rural locations. According to a report by real estate brokerage Redfin, for the first time since 2017, the net inflow of Redfin users to expensive coastal areas such as San Francisco, New York, and Los Angeles has decreased. Instead, smaller and more affordable cities such as Sacramento, Phoenix, and Las Vegas have seen increased interest.
The COVID-19 pandemic has had a significant impact on the real estate market. The demand for single-family homes continues to increase, mortgage rates remain low, and inventory remains limited. The use of virtual tools has become more widespread, and cities have experienced a decline in demand while suburban and rural areas have seen an uptick. Although interest rates have increased since this time, the housing market still faces high demand, which will likely drive up prices and rents in the foreseeable future.
About the Author:
Aaron Chapman is a veteran in the finance industry with expertise in complex transactions since 1997. He is ranked in the top 1% of over 300,000 licensed loan originators and closes over 100 transactions per month. Learn more at aaronbchapman.com.
The views and opinions expressed in this blog post are provided for informational purposes only and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.
SecurityNational Mortgage Company, and its loan officers, unless individually licensed and specifically denoted in their credentials, are not qualified to, and are prohibited from representing themselves as accountants, attorneys, certified financial planners, estate planners, investment specialists, or tax experts, and will not advise you in those matters. Always seek the advice of a licensed professional. This article is for informational purposes only, contains the opinion of the author, not necessarily the opinion of SecurityNational Mortgage Company, and should not be construed as lending advice. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet LTV requirements and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines, and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over life of loan. Reduction in payments may reflect longer loan term. Terms of the loan may be subject to payment of points and fees by the applicant. Aaron Chapman, NMLS#267844, SecurityNational Mortgage Company Inc., Co. NMLS# 3116, AZ Banker# 0904315, Equal Housing Lender. Any amounts, figures, payments, or loan terms stated are based on continually changing markets, rates, loan programs, and borrower-specific qualifications, and subject to change without notice. See loan officers featured for a personal consultation and accurate pricing.