Why is the housing market thriving in a pandemic?


The deadliest pandemic in more than a century has failed to derail the housing market because of the lowest mortgage rates ever recorded coupled with a shift in how people use their homes.

“The buyers are coming in because of the low interest rates – that’s the No. 1 reason,” said Lawrence Yun, chief economist of the National Association of Realtors said in an interview with HousingWire. “The secondary demand is coming from the work-at-home phenomenon that has people looking for bigger homes and caring less about commuting time.”

People now see their home not only as a place to live, but as a shelter during a national health crisis, Yun said. It’s also an office and, for families with children, often a part-time school.

Mortgage rates began tumbling in mid-March after the Federal Reserve announced it would buy mortgage bonds and Treasuries to keep credit flowing amid the pandemic. It was similar to a fixed-asset program it created during the financial crisis a dozen years ago.

The average U.S. rate for a 30-year fixed mortgage has been under 3% since late July, as measured weekly by Freddie Mac. When Fed Chairman Jerome Powell announced in March the Fed would purchase bonds, it was 3.65%.

Existing-home sales jumped 25% to a seasonally adjusted annual pace of 5.86 million in July, NAR said in an Aug. 21 report. It was the highest sales level since 2006 and the biggest monthly increase on record. The prior record for a monthly gain was the 21% jump seen in June, according to NAR data.

The supply of homes on the market was the lowest for any July since NAR started tracking the data about five decades ago, Yun said.

In the first months of the pandemic, Yun projected home sales in 2020 would see a 15% decline. After the Fed’s actions began driving down mortgage rates, he changed the estimate to a 7% decline.

Last week, Yun issued his latest monthly forecast that said existing home sales in 2020 likely will total 5.4 million, a gain of 1.1% from last year. Sales of new houses probably will rise 17% to 800,000, Yun said.

“We missed the spring buying season because of the pandemic, but the second half of the year looks quite dazzling,” Yun said.



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Low inventory means higher prices for California’s housing market


The California housing market rebounded in June with the largest month-to-month sales increase in nearly 40 years, and California’s median home price hit its own record high, the California Association of Realtors said.

After the statewide median home price fell below $600,000 in May, it rose to $626,170 in June, which was up 2.5% from June 2019. This makes it the highest recorded May-to-June average, CAR said.

Existing single-family home sales totaled 339,910 in June on a seasonally adjusted annualized rate, up 42.4% from May and down 12.8% from June 2019.

Homes priced below $500,000 made up 48% of total sales in May 2020, but only made up 44% of all sales in June 2020. Sales of million-dollar properties, on the other hand, increased in market share to 18.1% in the most recent month compared with 15.6% in May 2020.

“A new record high in the statewide median price suggests that there is stronger housing demand from more qualified, affluent buyers in this extremely favorable lending environment,” CAR Senior Vice President and Chief Economist Leslie Appleton-Young said in a statement.

Meanwhile, year-to-date statewide home sales were down 12.9% in June.

“Home sales bounced back solidly in June after hitting a record bottom in May, as lockdown restrictions loosened and pent-up demand driven by record-low interest rates roared back,” said CAR President Jeanne Radsick in a statement. “While the momentum is expected to be sustained as we kick off the third quarter, the resurgence in coronavirus cases remains a concern and may hinder the market recovery in the second half of the year.”

Just about half of the counties tracked by CAR, 26 out of 51 to be exact, had a year-over-year loss in closed sales. Mono County had the highest decline by far, down 40%. Napa County trailed, going down 28.2%. 

As a response to the pent-up demand from the delay of home-buying season, median home prices in the Central Valley rose 7.4% from last year, CAR said. Home prices in Southern California also rose 3.3% from the year prior. 

Speaking of pent-up demand, housing supply continued to trend downward on a year-over-year basis as well, CAR said. Active listings fell more than 25% for the seventh month in a row and active listings sank 43%. 

Across the state, all areas had housing supply decline more than 30% from the year prior, CAR said. More specifically, Southern California had the biggest drop in supply, as for-sale listings fell 47.3% year over year.

CAR conducted a Google poll earlier this month that revealed 44% of consumers said it was a good time to sell, up from 40% a month ago, and slightly down from 49% a year ago.

Likewise, 31% of consumers said now is a good time to buy a home compared to the 23% who said the same thing last year.



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Purchasing a home drives 15% of buyers to tears


Purchasing a home can be one of the most stressful financial transactions most people ever make, causing about a third of buyers to lose sleep.

That’s according to a new survey from Seattle real estate startup Flyhomes asking 1,000 people about the stress of homebuying. About 15% of respondents said they were reduced to tears during the process while 20% got in a fight with their spouse or partner because of the stress.

Almost two-thirds of the buyers said purchasing a property “was more stressful than they expected,” the Flyhomes report said.

“Stress and homebuying tend to go hand-in-hand, even more than people think,” it said.

About 40% said they spent more than they expected to when purchasing a home, the report said. Half of the people who overspent say that they paid more than $20,000 more than they expected to – and 14% went more than $50,000 over budget.

Almost a quarter of buyers said they had some regrets about their purchase. When asked about specifics, over half say their new home required unexpected repairs or maintenance, a quarter said property taxes were higher than they expected, and 20% said maintenance was more work than they expected.

There were other regrets:

  • Almost 1 in 5 said they weren’t happy with the location.
  • About a third said they wished they’d bought a larger house.
  • One in 5 said they wished they had more bathrooms.
  • Nearly a third said they wished for a larger kitchen.



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Realogy unveils new CRM and app for agents


Realogy, the largest owner of U.S. real estate brokerages, this week unveiled a new suite of tools for its agents it’s calling a “productivity hub.”

It includes a customer relationship management (CRM) program as well as an app that allows agents to instant message with customers.

Other features still in development that will be included in the productivity hub in the future include a transaction management program, a lead management tool and a program for analytics and reporting data, Realogy said in a statement.

“It’s all about making agents productive, deepening agents’ relationships with existing clients and expand their network with new clients,” Dave Gordon, Realogy’s chief technology officer, said in an interview with HousingWire. “These tools enable them to do that, making them more productive and more efficient.”

Realogy is the owner of NRT, the nation’s largest brokerage measured by two key metrics: the total dollar volume of transactions and the number of real estate agents. In addition to NRT, Realogy brands include Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Corcoran, ERA, Sotheby’s International Realty.

In July, Realogy announced a partnership with Amazon, the world’s largest retailer, to match homebuyers with real estate agents through a program called TurnKey.

Potential buyers will be able to go through their Amazon account, click on TurnKey, put in details about the size, price and location of the home they want to buy, and then be matched with one of Realogy’s agents.

In return, customers get up to $5,000 of Amazon products and assistance called a “Move-In Benefit,” which includes help with chores and product installation through a division of the retailer called Amazon Home Services.



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RE/MAX: The December housing market broke records


By one measure, December 2019 was the strongest close to the year of any year in the last decade.

RE/MAX released its National Housing Report for December 2019 last week, which revealed that the month posted a record finish to a year and the decade.

December finished with a year-over-year increase in home sales of 13.5% in the 54 metros it covers. This is the highest increase of any month in 2019, the report said.

It’s also the highest for the month of December since 2009.

And as sales increased, inventory fell. According to RE/MAX’s report, December saw a 14.5% year-over-year decline in inventory.

Consequently, there was a significant drop in the months supply of inventory. According to the report, there was only 3.3 months of available inventory on the market as of December 2019, compared to 4.8 months in December 2018.

“It was good to see the year-over-year spike in December home sales, indicating robust homebuyer interest,” said Adam Contos, CEO of RE/MAX.

“The strong December capped a solid second half of 2019, with year-over-year sales increases in four of the final six months,” Contos added. “The gains were largely attributable to low interest rates and high demand, and with those factors still in place, we expect sales to continue at a solid pace into the first part of this year.”

Interestingly, housing inventory grew year over year in the first six months of 2019, but shrank for the last six months of 2019, the report said.

The median sale price of a home was $266,000 in December, 11.1% higher than in December 2018. It also represented the highest year-over-year increase for any month of 2019.

Leaders of the year-over-year sales percentage increase were Birmingham, Alabama, up 34.3%; Burlington, Vermont, up 26.7% and Los Angeles, up 26.2%.

Average days on the market remained near the same level as the previous year, with days on the market in December 2019 for 54.

That’s up five days from November’s average but down one day from December 2018’s average.

The metro with the lowest days on the market were Omaha, Nebraska at 24. Homes in Des Moines, Iowa spent the most time on the market, at 110 days.



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