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What the Housing Market Currently Looks Like Amongst COVID-19

Posted by Scott Maizlish on Friday, May 22nd, 2020 at 10:10am.

 

5227 Heather Lane

Home for sale with Summit Sotheby’s International Realty

4 Beds – 4 Baths – 2,810 sq. ft – 1/4 acres 

Head here for more information

At the current moment, as of May 2020, many states are starting to lift stay at home orders and reopen their economies. Most of Utah has officially moved into the “stabilization phase” as businesses reopen, and residents acclimate to a “new temporary normal.” 

The COVID-19 pandemic has certainly had an impact on the housing market, but as states begin to reopen, we’re seeing quite the recovery. Overall, it’s looking like demand for homes is high, but the supply of listings is lower than usual, although it is slowly rising.  

When it comes to the current state of the housing market, there are still many unanswered questions. However, we can look at a few different metrics to see what the current housing market is looking like and to get a better picture of what the market may have in store for us in the future. 

Supply of New Listings 

In March, when the COVID-19 pandemic first took its hold in the U.S. and states started issuing stay at home orders, many sellers took their homes off the market. Also, many of those who were looking to list their properties in March decided to hold off indefinitely. This caused a sudden drop in the supply of listings in the United States. 

At the current time (May 2020), the number of new listings is still much lower than what we were seeing last year at this time. However, the numbers have started to improve. 

The real estate listing site, Realtor.com, reported that for the week ending on May 9th, new listings were down 29%. This is a shift in a positive direction since the week prior (ending May 2nd) had new listings down by 39%.  

After having a few weeks where new listings were down by about 40%, seeing the percentage go to 29% is very promising. That 10% change means that a significant amount of new homes are starting to be listed on the market. 

Overall, fewer sellers are putting up their homes for sale as compared to last spring, but that’s not surprising considering everything going on with COVID-19. Thankfully, the momentum has been shifting in a positive direction, and more and more sellers are starting to list their homes. 

(Speaking of new listings, we have quite a few gorgeous homes available that recently got put on the market. You can check them out here.)

 

3005 Solamere Drive

Home for sale with Summit Sotheby’s International Realty

5 Beds – 4 Baths – 3,712 sq. ft – 1.4 acres 

Head here for more information

Housing Demand

Like with most things, supply and demand are very important to consider. We already talked about how the supply of new listings is considerably lower than last year, but is improving week by week. But what is the market looking like in terms of demand?

The demand for homes right now has actually increased past the level it was at before the pandemic. For the first full week of May, home buying demand stood at about 5.5% higher than it was at the beginning of 2020. (This number is measured based on the number of requests Redfin agents have received.) 

Demand had dropped quite a bit during the height of the pandemic, but it is now recovering substantially. 

This recovery in home-buying demand is likely due to the super-low mortgage rates and the improvements the economy is seeing because of recent reopening. More families are beginning to feel stable again and are potentially in a better position to purchase a home. 

Other data that points to an increase in demand is the increase of home loan applications filed recently. The rate increased by 0.3% in the week ending on May 8th, according to the Mortgage Bankers Association. 

Joel Kan, associate vice president of economic and industry forecasting at Mortgage Bankers Association said the following:

“There continues to be a stark recovery in purchase applications, as most large states saw increases in activity last week. We expect this positive purchase trend to continue – at varying rates across the country – as states gradually loosen social distancing measures, and some of the pent-up demand for housing returns in what is typically the final weeks of the spring homebuying season."

 

8974 Sackett Drive

Home for sale with Summit Sotheby’s International Realty

5 Beds – 5 Baths – 4,306 sq. ft – .34 acres 

Head here for more information

Home Prices

At the moment, home prices are remaining fairly consistent. Sellers are currently reluctant to reduce prices on their homes. 

This is according to the National Association of Realtors (NAR), which said that 72% of real estate agents have stated that sellers have not lowered their prices. Plus, those who have lowered their prices have only done so by about less than 5%. 

But at the same time, most buyers are expecting lower home prices during these times. The NAR stated that about 58% of surveyed agents said buyers are expecting a decrease of about 5-10%. 

Realtor.com also noted that many of the available homes are shifting towards more expensive properties. If this dynamic carries on, this could lead buyers to experience a larger affordability gap. 

The Overall State of the Housing Market 

Although the market did experience a bit of a pause for a while, and there was a drop in both supply and demand temporarily, the housing market is making quite the recovery. 

Demand is currently passing pre-coronavirus levels. Inventory is down but steadily rising. Overall, the market is doing well. Both buyers and sellers should feel confident in buying or selling at this point. 

While sellers are likely to enjoy a “seller’s market,” since inventory is lower than usual, buyers are receiving some benefits during this time as well because of lower mortgage rates. Since April 23rd, 30-year fixed-rate mortgage rates have been about 3.25%.  

With selling prices staying steady and a shortage in inventory, right now is a fantastic time to sell your home. If you’re thinking about listing your house, give Scott or Natalie a call at 435-901-4309 or 801-244-2367.

 

Sources:

https://www.redfin.com/blog/homebuying-demand-passes-prepandemic-levels/ https://www.realtor.com/research/weekly-housing-trends-view-data-week-may-9-2020/

https://www.forbes.com/sites/dimawilliams/2020/05/15/five-indicators-to-watch-in-the-housing-market-recovery-from-the-coronavirus/#5857d34e5f06

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