Earlier this month, realtor.comannounced the release of their initial Housing Recovery Index, a weekly guide showing how the pandemic has impacted the residential real estate market. The index leverages a weighted average of four key components of the housing industry, tracking each of the following:
Housing Demand – Growth in online search activity
Home Price – Growth in asking prices
Housing Supply – Growth of new listings
Pace of Sales – Difference in time-on-market
The index then compares the current status “to the last week of January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”
The graph below charts the index by showing how the real estate market started out strong in early 2020, and then dropped dramatically at the beginning of March when the pandemic paused the economy. It also shows the strength of the recovery since the beginning of May. Promising Signs
It’s clear to see that the housing market is showing promising signs of recovery from the deep economic cuts we experienced earlier this spring. As noted by Dean Mon, Chairman of the National Association of Home Builders (NAHB):
Buyers are looking for houses! And inventory is exceptionally tight. House buying activity beat predictions for May and grew 44.3% over April. Increased demand along with low inventory have driven prices up 5.5% during the pandemic. These factors, coupled with the lowest mortgage rates ever (hovering 3% for a fixed 30-year loan in early July and VA loans in the 2s with NO fees!), have resulted in an extremely competitive market—even during a global pandemic. It is still unclear how the spike in COVID-19 cases currently happening in several major metros will impact these conditions, but for now, it is a fast market. We are definitely seeing the same thing here in our local South Florida market.
Pending home sales rose 44.3% in May compared to the previous month—a stunning spike that is the largest jump in the history of the survey which began in 2001. On the flip side, sales were still 5.1% lower than May of last year. Buyers came back to the market and took advantage of virtual tours, individual tours of empty houses, and also signed contracts without ever seeing the property in person. While these healthy trends are quite encouraging, some economists are warning that the rise of COVID-19 hot spots in certain areas of the country is a cause for concern.
Applications for home purchases have been rising rapidly over the past couple of weeks. Record lows since Freddie Mac started tracking things 50 years ago is the culprit. With the 30-year fixed-rate mortgage averaging 3.13% last week, buyers are eager to take advantage of these rates.
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If you are thinking of selling your home now, postion it right and you should expect short days-on-market times and even mulitple offers. If you're thinking of taking advantage of the amazingly low interest rates and buying now, be ready to move fast to jump on great opportunities when they hit the market.
Stay tuned for updated market reports as I track the market. Please call me if you'd like to discuss your home selling or buying plans. And remember, one of our specialties is relocation. We are seeing a surge in migration to Florida and expect it to increase, so if any of your friends or family have decided that it's time to finally head to Florida, my team and I are here to consult, answer questions, and get them into the homes of their dreams!